Malawi Finance Minister faces calls to resign

Malawi’s finance minister Ken Lipenga is facing calls to resign his position after he admitted that the country’s revenue authority borrowed K15 billion to prop up its domestic revenue target.

The borrowing from commercial banks to finance the Zero Deficit Budget was illegal because it was done without a loan authorisation bill presented in parliament.

“Its true that our investigations show that there is some truth in that MRA borrowed from banks but I can’t make conclusions because investigations are not through yet,” he said.

Lipenga made the admission when key donors urged him to investigate allegations that the Malawi Revenue Authority had borrowed K15 billion from commercial banks to portray that it has surpassed its revenue target for the first half of the 2011/12 financial year.

Asked whether he will resign Lipenga said: “I cannot resign because I was not told about what had happened, and I never took part in that.”

Lipenga is one of the few ministers that new President Joyce Banda has retained in her cabinet. Banda, the first woman president in southern Africa, took over after the death of President Bingu wa Mutharika who died last month after a heart attack.

Mutharika was serving his final term of office which was due to end in 2014.

It has now come to light that in the last financial year MRA under performed in revenue collection by around K40 billion and built up arrears of around K60 billion

Treasury officials say that the underperformance in the last fiscal year may have forced MRA to borrow from the banks because they were under pressure to feed the zero deficit budget, which was becoming unsustainable without donor inflows.

“We all knew that the zero deficit budget was not going to work because MRA was not going to meet its targets, which was made worse by the donor boycott,” a treasury source said.

Banda is now trying to made fences with donors and she has already devalued the kwacha by about 50 percent to appease the International Monetary Fund with whom she is negotiating a new aid facility.

Meanwhile, a legislator who challenged Lipenga’s figures when he presented to parliament in January, has demanded that the minister apologies for dismissing his claims against MRA.