Reserve Bank says not involved cash-gate

The Reserve Bank of Malawi (RBM) has denied responsibility in the Capital Hill looting,  but has noted that government’s payment system has challenges in which a parallel manual system is operated.

In a press statement issued on Monday, the central bank notes that it is clean in the government’s financial mismanagement saga although it observes it has a close working relationship with the central government through the Ministry of Finance.

The Public Accounts Committee (PAC) of Parliament recently summoned RBM to explain mismanagement and misappropriation of government finances which has been blamed on the shortfalls of the Integrated Financial Information Management System (Ifmis).

On Friday, Economic Empowerment Action Group (EEAG) president Lewis Chiwalo has given central bank governor Charles Chuka a seven-day ultimatum to resign.

However, in the press statement, RBM notes that due to the close working relationship with the Ministry of Finance, it was inappropriate to explain the central bank’s role to the public.

RBM said government’s Account Number One cheques are issued against it and is only used as a conduit to other operational accounts once donor funds and other government revenues are deposited in it.

The central bank notes that there are two payment systems for government transactions: the Credit Ceiling Authority (CCA) and the Central Payments System (CPS).

Reads the statement in part: “The CPS was designed to move away from CCA and centralise the government payment process. Currently, it is operating under six Central Payments Offices [CPOs]; the Accountant General; Southern Region Treasury Cashier; Eastern Region Treasury  Cashier, Northern Region Treasury Cashier, Malawi Defence Force and State Residences. This system is interfaced with the Ifmis through Staffware.”

The  Common Approach to Budgetary Support—comprising Britain, the European Union, Germany, Norway and the African Development Bank—announced on Thursday the withholding of $150 million (about K60 billion) aid for October to December, due to financial mismanagement that has rocked the Capital Hill.

Earlier the International Monetary Fund (IMF) announced the suspension of aid over same concerns.

Donors contribute about 40 percent of the total of grants and revenues to the Malawi’s national budget.