In 2013, the European Union, among the donor communities, suspended aid to Malawi due to the Cashgate scandal involving the misappropriation of government funds. However, with the current administration led by Chakwera instilling confidence in the donor community, direct budgetary aid support from the EU, through the Common Approach to Budget Support (CABS), is set to resume in the upcoming financial year.
Ten years down the line Malawi President Dr. Lazarus McCarthy Chakwera in March this year met Commissioner Jutta Urpilainen of European Union (EU) on the sidelines of the LDC5 5th United Nations Conference on the Least Developed Countries (LDCs), in Doha, Qatar.
Chakwera held bilateral talks with the European Union Commissioner who is also Ambassador to Malawi -Rune Skinnebach and the president appealed for the resumption of budgetary support which would invigorate forex flows and by extension pave way for greater economic movement.
The EU expressed the possibility of aligning the budgetary support to specific sectors in particular education and pledged its continued support to Malawi.
Eight months down the line EU has lived to its promise following the announcement that it is starting direct budgetary support.
“I am very hopeful that the EU will now be in the a position to resume direct budgetary support in the next fisical year if Malawi continues to be on track and meet the benchmarks of the ECF,” said Skinnebach.
Commenting on the devaluation, the EU chief commended Government for the decision.
Said Skinnebach: “Prior to devaluation there was a misalignment between the informal and the formal exchange rate. The misalignment inspires all kinds of frauds and it undermines the possibilities of regulating the economy.”
He said it was necessary to devalue the Kwacha to ensure a stronger degree of alignment.
“On top of that we saw that it was followed through with the ECF and a series of development partners including the EU have been engaged to do our utmost to cushion the negative effects of devaluation. I am sure in the longer term it’s a right decision,” he said.
