Barely a week after finance Minister Ken Kandodo announced that Malawi's major donors are withholding more than US$400 million in aid in protest over government's repressive media laws and bad governance, a grouping of donors under the Common Approach to Budgetary Support (CABS) have also sent a warning shot over the same issue.
Ken Kandodo: “The decision by the four nations [to freeze donor funds] has had serious implications on the country’s economy..."
Malawi amended and passed section 46 of the penal code which empowers Minister of Information to ban any publication seen to be outside public interest.
A significant proportion - some 40% - of Malawi's national budget is donor supported.
CABS comprise the European Union (EU), Britain, Germany, Norway, the World Bank and the African Development Bank.Concerns
Alexander Baum, head of the European Union delegation to Malawi, who chairs the grouping, said in a statement on Wednesday, 23 March 2011 that there are concerns regarding the underlying principles of budget support such as the rule of law and human rights.
"There are concerns about press freedom, freedom of expression, freedom of assembly and the respect for minority rights," he said.
He said these issues as well as uncertainty surrounding the holding of local government elections could have a direct impact on the predictability of budget support and even Malawi's eligibility for budget support in the case of some donors.Missing money
Baum said although it is a constitutional requirement to hold the elections based on a timetable set by government itself there is nothing to show on the ground although government insists that the polls will be held as planned on 20 April.
President Bingu wa Mutharika in December last year suspended the electoral commission after an audit found US$9 million in election funding was missing.
Last Wednesday, the finance Minister told Reuters that the freezing of aid has put the government on a financial tight rope.
"The decision by the four nations has had serious implications on the country's economy resulting into a shortfall on projected donor inflows in the first half of the 2010/11 fiscal year," he said.Shortfall
Kandodo disclosed that total grants amounting to K41 billion (about US$269.7 million) have been received against a projection of K55 billion (about US$361.8) representing a shortfall of K14 billion (about US$92.1 million) and one key reason for the shortfall was the under-performance under the Health Sector Wide Approach.
On 7 February 2011 the German government became the first donor country to freeze aid money to the Malawi government citing concerns over the recently endorsed repressive media law and human rights abuses as the reasons.
Three days later France, Germany, Iceland, Ireland, Japan, Norway, the UK and the US, issued a joint statement in which they declared that they share the concerns voiced by many Malawians about certain negative trends in the country.
The statement which the eight heads of mission to Malawi jointly issued on Friday, 10 February 2011 said the passage of the Penal Code Amendment Act heightened their concerns and therefore urged the leadership to put in place good governance and respect for human rights.