The Malawi government has failed to account for seven million dollars out of a $52-million budget support package from the European Union to the impoverished southern African state, an EU representative said on Thursday.
“I confirm that there was an irregularity with an audit report and seven million was unaccounted for and the government could not explain where the money is,” Charles Undulu, a local representative for the EU office here told AFP.
He said under the three-year aid package accord, the government is required to refund the money “for budgetary support aid to continue to flow.”
The $52-million aid package was to be disbursed in four tranches, starting in 1999, with the final $15-million due to be released this year.
“Malawi will lose $15-milllion if it does not pay back the seven million dollars it has not accounted for,” Undulu said.
The funds were earmarked to support projects in health and transport and to pay salaries of 120 000 civil servants.
He said the government has pledged to reimburse the missing money ?at the end of August?.
The International Monetary Fund (IMF), one of the main sponsors of the country’s tough economic reforms, has also delayed disbursing $47-million of a $55-million package over concerns of over-spending by the government of President Bakili Muluzi.
Britain, the largest donor of development aid to Malawi, has also withheld the first tranche of funds from a three-year $109-million deal until the IMF gives it the nod.
Finance minister Friday Jumbe in June expressed regret at the withdrawal of aid by donors, who fund 80% of the country’s development budget, saying this had adversely affected the implementation of last year’s budget.
It was the first time a high ranking Malawian official had publicly acknowledged that the withdrawal of aid had derailed the country’s agriculture-based economy.
Malawi’s new budget, which was passed on July 1, is being funded largely through local resources and not donors. – AFP