adminLILONGWE. – The International Monetary Fund (IMF) has said Malawi is in a crisis following donors withholding aid in reaction to a growing scandal over government graft known as Cashgate. IMF Mission Chief Tsidi Tsikata said this at a news conference organised to brief the media on the outcome of its two week mission in Malawi to conduct discussions for the third and fourth reviews under Malawi’s Extended Credit Facility (ECF) arrangement.
The IMF team has been in the country from November 5 to 20, 2013 on a make-or-break mission to gather information on the Cashgate scandal.
Its fact-finding efforts will determine Malawi’s fate on whether the IMF will further disburse its US$20 million under the ECF.
“I am talking of the crisis because the fiscal situation was designed on the inflows of substantial amount of external support and that is at risk because of what you are probably calling it cash-gate,” he added.
He pointed out that IMF strongly condemns looting of public resources at Capital Hill, saying “the situation has triggered anger among Malawians as well as uncertainty to Malawi’s economic outlook.” The IMF boss said freeze of budgetray support is worrisome for a country like Malawi where 40 percent of its national budget comes from donor aid.
“In our interaction with Malawians, we also felt a lot of anger and frustrations (among Malawians) and I think the combination of anger among Malawians themselves speaks of the challenge that the government faces and the government needs to be taking measures to address the concerns of Malawians ,” the IMF mission chief added.
In his reamrks, Mkwezalamba down played fears that treasury will resort to heavy borrowing from the domestic market to fill revenue gaps in the wake of the aid cut.
Meanwhile, the European Union (EU) has said it is considerering phasing out support to the transport sector in African countries but explained that it was inaccurate to suggest that it had withdrawn aid to Malawi.
The Daily Times under the headline ‘EU withdraws transport’ aid reported yesterday that the EU has stopped “pumping support to the transport sector.”
However, Alexander Baum, the head of the EU mission in Malawi clarified the report.
He said it was inaccurate to say that aid had been stopped.
Malawi’s Transport and Public Works Minister Sidik Mia has since asked the EU to consider “a gradual pulling away” from the transport sector and also appealed to other donors “to consider increasing their support to the sector.” – Nyasa Times.
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