Malawi plans to increase funding to anti-graft institutions and police to fight corruption in a bid to win back key donors who are withholding crucial budget support as a result of corruption.
Donors last November announced an aid freeze of US$150 million after the scandal, known locally as “cash-gate”, in which an estimated $15
million was stolen by a syndicate comprising senior government officials, ministers, bankers and staff at the central bank.
The aid freeze, which has traditionally accounted for 40 percent of the budget, has coincided with a steady decline in sales of Malawi’s biggest cash crop, tobacco.
“The former administration of President Joyce Banda left did its best and laid the foundation to fight Cash-gate but funding was not enough
and we intend to increase funds to Police and the Anti-Corruption Bureau,” Gondwe said in an interview
The International Monetary Fund (IMF) last month said that Cash-gate and the aid freeze contributed to the sharp depreciation of the kwacha
and the surge in inflation in 2013
“To restore confidence with donors and get aid back it will be important for the government to investigate the fraud thoroughly and
to implement the action plan that the former administration of President Banda started to address the weaknesses in public financial
management exposed by the fraud,” Gondwe said.
Banda, who took office in April 2012, implemented austerity measures that led to a restoration of a $79 million IMF aid programme suspended
due to a conflict with her predecessor Bingu wa Mutharika.
Many observers believe that Banda, who lost the election to Peter Mutharika, laid a good foundation to investigate cash gate.
“Very few African leaders could have done what Joyce Banda did heading into an election year…it was courageous to take on a powerful syndicate
to fight corruption,” said Joseph Mhango, an economist and political analyst.