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Two economic bodies on Thursday said the IMF may delay more aid to Malawi because of government’s failure to adopt wholly the Corrupt Practices (Amendment) bill and its negligence to fund pro-poor activities.
Malawi Economic Justice Network (Mejn) and Economics Association of Malawi (Ecama) were commenting on the economic assessment the Fund is expected to carry out on Malawi at the end of this month.
Mejn national coordinator Collins Magalasi said government has not improved its funding to pro-poor areas.
“During the last quarter of last year, Mejn did an analysis on pro-poor funding. The result was that government did not commit much to this area,” said Magalasi.
He said when Mejn presented the issue to government, the authorities said that funding would improve once aid started flowing.
“But there have been no improvement up to now,” said Magalasi.
On the Corrupt Practices (Amendment) bill, Magalasi hoped that the IMF will make government adopt the bill in its totality.
“The civil society, Parliament and other donors have all tried to push for the bill but government has remained adamant,” said Magalasi.
The British government, one of Malawi’s biggest bilateral donors has repeatedly made it clear that it will be difficult to continue disbursing budgetary support if government does not adopt the amendments.
“Government has dilly-dallied to pass the Corrupt Practices (Amendment) bill. This may not please the IMF,” said Ecama spokesman Perks Ligoya.
He added: “We will not be surprised if it turns out to be the reason the IMF refuses to continue the programme with Malawi.”
The bill’s sticky issue that government is not comfortable with is the removal of a clause in the present Act that directs the ACB to seek the DPP’s consent before prosecuting suspects.
Rafiq Hajat of the Institute for Policy Interaction (IPI) said it would not be fair for the IMF and other donors to think that Malawi should bow down to all their demands.
Finance Minister Friday Jumbe is banking on his achievement to reduce the prime rate from 46 percent to 36 percent and his commitment to cut the rate further to 25 percent by December.
But already, the financial sector is questioning how that will be achieved when government borrowing, the main driving factor, is on the increase.
The Reserve Bank of Malawi (RBM) last week announced that it would maintain the bank rate at 36 percent until government cuts domestic borrowing.
Jumbe also hopes the IMF will notice that the kwacha has stabilised now and believes plays the Fund will remember that the country’s inflation at one point hit the revered single digits in the period to be reviewed.
But inflation has gone back to the dreaded double digits and monetarists say the kwacha would be lucky to escape a free fall in the next few weeks.
As for fiscal discipline, Jumbe admits that government overspending but is quick to convince that it is not as bad as people think.
Both Ligoya and Magalasi were unable to comment on fiscal discipline, saying they do not have expenditure figures because Treasury has not been willing to give them even after asking them on several occasions.
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