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Peter Mutharika’s hope for direct budget support fades

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President Peter Mutharika, who has been pleading with development partners to resume supporting the national budget, has acknowledged that days of direct support to the budget are over.

Several donor organisations and countries have paid a deaf ear to Mutharika’s several pleas for resumption of direct budgetary support, even after his assurances that the government has strengthened the public financial management system to avoid a recurrence of Cashgate.

Responding to a question from an MBC Television viewer, who wanted to know what his government is doing to restore donor confidence, Mutharika said on Thursday that it is high time Malawians accepted the fact that budget support is gone.

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Mutharika, who was responding to the question through ‘Talk to the President’ programme, said Malawians should start mobilising local resources.

Parliament on Thursday nodded to a K20 billion cut in the 2016/2017 national

budget after Minister of Finance, Economic Planning and Development, Goodall Gondwe, announced that total revenue and grants at mid-year amounted to K430.2 billion against a target of K482 billion, reflecting an underperformance of 10.7 percent of the midyear target.

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Gondwe attributed the development to underperformance of grants offered by donors.

The development has forced the government to revise downwards grants from donors, trimming the figure from K197.4 billion to K158.7 billion.

“I think the Minister of Finance has said it many times that we should forget about budget support. I think the western donors are pulling out of almost every country in Africa; elsewhere, it is not only here. They have pulled out of Tanzania, another place, in terms of budgetary support. It is simply something that is not going to be there anymore,” Mutharika said.

He said any budget support to the country will probably be transitional but there will be other forms of targeted aid for projects and for specific areas of the economy.

“That is still happening in the health sector, agriculture. There is still [sic] assistance coming in but, in terms of lump sums of money to support the budget, I think it is probably better that we accept the fact that it is not going to happen and we need to try to mobilise our own resources.” he said.

Mutharika said his government is working hard to attract direct foreign investments so that they may bring private capital.

In his mid-year budget review statement, however, Gondwe said the country is likely to receive budgetary support from multilateral organisations.

He said the World Bank has indicated that the earmarked amount of US$80 million as budgetary support could be disbursed within the 2016/2017 financial year, depending on the government’s commitment to meeting the bank’s conditions.

“We also expect the European Union to disburse an amount of more than US$20 million. This will be on top of some budget support that has already been provided by the African Development Bank.

“We also expect that the IMF [International Monetary Fund] will disburse more than US$20 million when they complete their ninth review of the Extended Credit Facility within this financial year,” Gondwe said.

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