MALAWI: President Joyce Banda names new Finance Minister even as EU threatens funding withdrawal.

Record ID: 862423

  • Title: MALAWI: President Joyce Banda names new Finance Minister even as EU threatens funding withdrawal.
  • Date: 17th October 2013
  • Summary: BLANTYRE, MALAWI (FILE) (REUTERS) STREET SCENES
  • Embargoed: 1st November 2013 12:00
  • Keywords:
  • Location: Malawi
  • City:
  • Country: Malawi
  • Topics: European Union,Economy,Politics
  • Reuters ID: LVA9XOHPLF3MQJEU0FVSZ1E6P8W
  • Aspect Ratio:
  • Story Text: Malawi is battling to deal with rampant corruption that has donors threatening to cut-off much needed funding for one of Africa's most impoverished countries.
    President Joyce Banda, southern Africa's first female head of state, recently dissolved her cabinet after several junior officials were arrested on suspicion of stealing state funds.
    The scandal, known locally as "cash-gate" forced the government to shut down its payment system so that it could investigate over four million US dollars that went missing, delaying the payment of salaries to teachers, nurses and doctors.
    Envoys from eight Western donor nations have asked Banda to deal with the alleged corruption at the treasury and investigate the recent shooting of the budget director.
    The European Union warned that it would withhold scheduled funding if the government does not deal decisively with corruption and fraud.
    Western donor aid traditionally has accounted for about 40 percent of Malawi's state budget.
    "The point is that the European Union will not be the only to pull out of budget support if the systems were confirmed as unreliable. Unreliable not just in short period of time but consistently unreliable and therefore we will not be able to disburse into the budget. If that was to happen we would see actually a heavy impact on the micro-economic side," said Alexander Baum, European Union Ambassador to Malawi.
    Malawi's troubled economy has shown signs of improvement in the past few months with inflation that was once running over 30 percent easing slightly, while earnings from its main export tobacco are expected to double this year from 2012.
    Analysts, however, indicate that these gains may be reversed if the government is seen to be dragging its feet in the fight against graft.
    "If we miss this particular time, or this particular opportunity to rectify the problems for sure we are getting these signals from the donors that they are not comfortable with their monies being looted out. They are not comfortable with their resources going to the drain. Therefore, they have got every right and justification to withdraw their tax payer's money. It is us as Malawians to be decisive and to be seen to be decisive in dealing with this particular problem," said Economic analyst Abel Mwanyungwe.
    Banda has appointed a new Finance Minister and replaced two other ministers in the 32-member cabinet. Anti-graft watch dog Transparency International ranks Malawi 88 out of 176 in its global corruption index.
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