- The Washington Times - Thursday, May 16, 2002

BLANTYRE, Malawi (Agence France-Presse) The International Monetary Fund announced this week that it will not release $47 million in aid to Malawi until the government cuts expenditures and implements a new budget to be published in June.
"We have made progress in our discussions with the government, the reserve bank of Malawi, and we hope Finance Minister [Friday Jumbe] will submit a budget that is constructive," the IMF's southern Africa deputy chief, Alfred Kammer, was quoted by the Daily Nation as saying on Tuesday.
Mr. Kammer, who spoke at the end of a two-week IMF budget-review meeting with the government, also was quoted by the paper as saying the fund wants to see serious progress on reducing overspending.
The government has overshot its budget target, which shows a $45 million deficit, or 1.9 percent of gross domestic product (GDP).
In response to the overspending, the IMF has delayed disbursing $47 million of a promised $55 million package.
Mr. Jumbe, who admits that the economy is in a "mess," said the government is committed to healing the economy. "Right now, we are working on next year's budget, which will reflect tough budget cuts, especially in non-priority areas," he said.
Britain, the largest donor of development aid to Malawi, also has withheld the first tranche of funds from a three-year, $109 million package until the IMF approves Malawi's budget.
The World Bank and the IMF, major sponsors of the country's tough economic reforms, say they have "no problems" with Malawi's level of spending on health and agriculture.
But critics say Malawi has wasted resources on non-priority areas such as foreign travel by government officials, which was "consuming a lot from the budget," according to World Bank resident representative Dunstan Wai.
President Bakili Muluzi and his deputy, Justin Malewezi, often make separate foreign trips, with large entourages of officials and security personnel.
Mr. Muluzi, the chairman of the 14-nation Southern African Development Community also travels extensively within the region.
Donors and Malawi treasury officials told AFP that maintaining several government palaces and state residences throughout the country also drained the poor country's resources.
A statement issued by the IMF attacked lack of good governance, saying it had resulted in the miscalculation of resources, increased the cost of doing business and eroded general trust in public sector activities.
"There is a need to recognize that corruption, weak governance coupled with bad policies make financial aid ineffective and even counterproductive," the statement added.


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