malawi in Budget Crisis: President Mutharika threatens to close Parliament

By Mabvuto Banda

LILONGWE (Reuters) - Malawi's President Bingu wa Mutharika threatened on Tuesday to close parliament if a budget crisis threatening to cut off services in the impoverished nation was not resolved within two days.

The 2007/2008 budget debate, which should have been concluded by June 30, was suspended last month because the opposition first wanted a dispute over the poaching of its members by the ruling party settled.

"I am giving them two days -- today and tomorrow -- and if today and tomorrow they do not start discussing seriously the budget, I am closing down the parliament," Wa Mutharika said in a speech monitored on state radio.

"Parliament, especially the opposition, has abrogated their responsibility and as such they have therefore become irrelevant for the development of this country," the president said in the eastern town of Balaka.
Leaders in parliament were meeting on Tuesday afternoon to discuss what to do. Finance Minister Goodall Gondwe said in an interview with Reuters that the southern African country risked losing donor budget aid if the stand-off continued.

"We are in a financial crisis and further delays to pass the budget will be catastrophic as donors will not be forthcoming to put financial support to the budget," Gondwe told Reuters on Monday evening.

On Monday, the government rejected a proposal by the opposition to adopt a temporary three-month budget that would allow for public spending while the political dispute over the opposition's members was being resolved.

The draft 2007/08 budget allocates more resources to poor rural areas, proposes salary increases for civil servants and allows higher spending on health care and food production.
Malawi relies heavily on donor support for its public spending. Gondwe said the country was expecting $500 million of foreign aid for its $1.2 billion budget.

Frustrations have been growing in the southern African nation of 12 million people as the political standoff deepened, and thousands have taken part in demonstrations

Full article e from Reuters Africa

Australians to open Uranium Mine in Northern Malawi

Pilirani Semu-BandaBlantyre

Malawi will have its first-ever modern mining project located in the northern town of Kayelekera in Karonga by early next year if plans by an Australian mining company, Paladin (Africa) Limited, are successful.

In April this year, the Malawi government granted the mining company a licence to exploit up to 34,5 million tons of uranium.

• The project will generate an annual income of over 100 million US dollars, which is about five percent of Malawi's annual gross domestic product and 20 percent of the country's total export income.
• The revenue for the uranium is projected to exceed tobacco's annual proceeds of 19 million US dollars. Tobacco is currently Malawi's main foreign exchange earner.
• The uranium project also promises to transform the under-developed Kayelekera into a prosperous town and create jobs for 800 people during the construction phase and 280 people during the operational phase.
• It also promises to indirectly support more than 1,000 additional jobs, build a modern primary school, a secondary school and a health facility near the project area.

However, controversy has been dogging the project since its hatching stages with fears from the public that the mining of uranium poses serious health hazards, such as cancer and disability in infants due to radiation.

• n environmental impact assessment (EIA) was conducted last year by an international consulting firm, Knight Piesold Consulting. Among others, it indicated that the project could increase social problems in the Karonga area in the form of increased cases of HIV/AIDS due to the migration of sex workers to the area.

There will be an increase in the existing commercial sex industry and risks of sexually transmitted diseases and HIV/AIDS," says the EIA.
A group of six influential civil society organizations in Malawi said the company has neither complied with the Environmental Management Act nor with international uranium mining standards which underscore the importance of ensuring health and environmental protection for people.
These organisations were the Catholic Commission for Justice and Peace (CCJP), the Centre for Human Rights and Rehabilitation (CHRR), Focus on Karonga, Citizens for Justice, the Institute for Policy Interaction (IPI), the Uraha Foundation and the Foundation for Community Services.

They have since obtained a court injunction stopping the project from proceeding. It is unlikely that the issue will be resolved soon since court processes in Malawi usually take a long time due to case backlogs.
Titus Mvalo says uranium is radioactive and that with open-pit mining, like the one to be conducted at Kayelekera, the soil drains into rivers and contaminates the water. When humans drink the water, it damages kidneys and causes cancer.

• In Malawi, according to the 2006 Human Development Report (HDR), up to 33 percent of the population of 12 million people do not have access to safe water. They depend on water from rivers and lakes. Mvalo says there is a need for measures that will mitigate the damage that could arise from radiation.

The Rest @ AllAFrica.com, via inter-press Johannesburg

"Lawmakers Who Switch Parties Can Be Ousted" Says Judge

BLANTYRE, Malawi: Malawi's highest court ruled Friday that lawmakers who switch parties after their election can be ousted from parliament, a decision affecting scores of President Bingu wa Mutharika's supporters.

The ruling, delivered by Chief Justice Leonard Unyolo, could affect about 70 of parliament's 193 members, including Cabinet ministers, all of whom left the United Democratic Front to join Mutharika's Democratic Progressive Party. Mutharika was elected as a member of the United Democratic Front in 2004, but quit the party last year to found the Democratic Progressive Party, accusing his former allies of blocking his clampdown on corruption, and survived a subsequent attempt to impeach him.

the Rest @ The International Herald Tribune

Somali Refugees Stretching Malawi Security

Somali Refugees have been flooding into Malawi since the Somali war reignited. Malawi is shutting down a camp near the Mozambique border and tightening up their border with Tanzania. Officials have security concerns about trafficers using Malawi as a pass through country.

-Lee

In Malawi, our staff are rushing to install additional facilities for 3,000 refugees at Dzaleka refugee camp following a government order to close the only other refugee camp in the country. Although UNHCR will take until July to move all the refugees and asylum seekers from Luwani camp, it will have some of the necessary facilities in place in Dzaleka by the government's deadline of May 31.

The government said its decision at the end of last month to close Luwani was prompted by increasing concern at the number of asylum seekers who arrive from Ethiopia and Somalia, claim asylum, stay a few days at Luwani and then disappear over the border into Mozambique en route to South Africa.

It termed these arrivals - from what it sees as the unstable Horn of Africa - a threat to its own security. Luwani is located near the southern border with Mozambique, while Dzaleka is near the capital, Lilongwe, in the centre of the country. The government believes placing all asylum seekers in Dzaleka, further from the border, will reduce the number using Malawi purely as a transit route for heading toward South Africa.

The government also announced the deployment of soldiers to reinforce police along Malawi's northern border with Tanzania in order to tighten control on undocumented crossings. UNHCR has welcomed the government's assurance that these changes in policy, which are its right, do not mean any reduction in the government's international commitment to continue providing asylum to refugees. It is imperative that legitimate asylum seekers still have access to protection.

With the decision to close Luwani, the government also stopped moving newly arrived asylum seekers from the transit station it operated with UNHCR near the border with Tanzania. That has resulted in a build-up of asylum seekers at the transit station, which has a normal capacity of about 100 people but now holds more than 350. The government wants new asylum seekers moved to Dzaleka, which had previously been considered full with its current 5,000 residents. UNHCR is working to ensure a makeshift reception centre for new arrivals is available at Dzaleka by the end of the month.

The transfer of the 3,000 refugees from Luwani - likely to begin in the second half of June and take up to a month to complete -- will require additional school and medical facilities at Dzaleka.

Initially refugees will be housed in temporary structures and tents before they erect homes. Building materials for traditional houses - wooden poles and grass - is already being stockpiled. To ensure the disruption to education is minimized, students at first may have to study in makeshift structures.

Unlike those asylum seekers who quickly transit through Malawi with the apparent services of traffickers - the group who triggered the government's closure of Luwani -- most of the refugees to be relocated have been long-term residents of the camp. Some had hoped to become self-sufficient through farming at Luwani but there is little land available at Dzaleka so they will remain dependent on aid.


The Rest @ All Africa.com

World Bank Approves 15$ Million Aimed at the Private Sector

The World Bank Board of Directors today approved an International Development Association (IDA) grant of US$15million for the Business Environment Strengthening Technical Assistance Project (BESTAP) which is designed to support capacity development and investment climate reforms to accelerate economic growth in Malawi.

The project will support the Government’s strategy of a private sector-led economic growth. "The foundations for economic growth have been laid in Malawi with improvements in the macro-economic situation, and this opportunity needs to be seized. The project aims to support the development of the private sector in Malawi as an engine for sustained economic growth," says Malawi’s Country Manager, Timothy Gilbo.

The Rest @ All Africa.com

Malawi a Transit Point for Somali and Ethiopan Refugees

In Malawi, our staff are rushing to install additional facilities for 3,000 refugees at Dzaleka refugee camp following a government order to close the only other refugee camp in the country. Although UNHCR will take until July to move all the refugees and asylum seekers from Luwani camp, it will have some of the necessary facilities in place in Dzaleka by the government's deadline of May 31.

The government said its decision at the end of last month to close Luwani was prompted by increasing concern at the number of asylum seekers who arrive from Ethiopia and Somalia, claim asylum, stay a few days at Luwani and then disappear over the border into Mozambique en route to South Africa. It termed these arrivals - from what it sees as the unstable Horn of Africa - a threat to its own security.

Luwani is located near the southern border with Mozambique, while Dzaleka is near the capital, Lilongwe, in the centre of the country. The government believes placing all asylum seekers in Dzaleka, further from the border, will reduce the number using Malawi purely as a transit route for heading toward South Africa.
The Rest @ all Africa.com

Blantyre Water Board Says there will be Water Shortages through August

The Blantyre Water Board (BWB) on Sunday said residents will continue experiencing water problems till August when the board hopes to have its pumps and motors fixed for proper utility distribution.

BWB general manager Owen Kankhulungo said at a press briefing in Blantyre that the water supply situation is currently unsatisfactory due to inadequate pumping capacity from the Walker’s Ferry and Chileka as a result of breakdown of pumps and motors.

He also attributed the problem to Escom’s power load shedding programme.“The motors are currently under repair in South Africa while procurement of essential spares is also in progress and at advanced stages,” he said. Kankhulungo justified their water rationing programme, saying currently the board is pumping an estimated 75,000 cubic metres per day, as opposed to an estimated demand of 95,000 cubic metres.

The Rest @ The Nation

Malawi Private Business Takes on Road Safety Issue

Three private sector firms—BP Malawi Limited, Nico Holdings Limited and Unilever South East Africa—have developed a road safety campaign called ‘Value Life, Value Safety’ geared to complement current government efforts to raise awareness on usage of roads to reduce accidents.

PCL group chief executive officer Mathews Chikaonda said during a briefing luncheon in Blantyre on Thursday the three companies teamed up to form a task-force on road safety after noting that the country’s roads were no longer safe. He said this situation called for an improvement of safety measures by all stakeholders in the country, including the private sector.

The Rest @ The Nation Online

Malawi High Court says Death Sentance not Automatic with Death Recommendatoin

The Constitutional Court sitting in Blantyre on Friday pronounced mandatory death sentence as unconstitutional, inhumane and a degradation to human dignity.The court was ruling in a case where a murder convict Francis Kanfantayeni and five others were challenging the constitutionality of the death penalty.

“We hold and declare that Section 210 of the Penal Code is invalid to the extent of mandatory death penalty...The declaration does not outlaw the death penalty but the mandatory death sentence following a murder offence,” said Justice Elton Singini as he read out a judgement reached at unanimously with justices Frank Kapanda and Maclean Kamwambi.

The Rest @ the Nation Online

Children's Health Center Being Built by Madonna

Malawi is preparing for a return visit by pop star Madonna, whose efforts to adopt a Malawian toddler last fall sparked an international controversy.

The singer's New York-based publicist, Liz Rosenberg, said Madonna was going to Africa to continue her work with the Raising Malawi organization, which supports the country's many AIDS orphans. She denied rumors that she is going to adopt another child.

'She is overseeing the building of a children's health care center. She is absolutely not adopting another baby,' Rosenberg said in a statement.

The Rest @ Topix.net

Malawi Economic Indicators Improving

Speech by Mr Victor Mbewe,
Governor of the Reserve Bank of Malawi,
at the Sovereign Credit Rating Dissemination Conference,
Lilongwe, 16 March 2007.


I feel greatly honoured and happy to stand here today at this very important dissemination conference where Malawi has attained yet another economic development milestone indicating an improvement in the country’s creditworthiness. Credit rating is one of the areas where Malawi was considered lagging behind under the Millennium Challenge Account.

Honourable Minister, distinguished ladies and gentlemen, since the last credit rating in December 2005, where Malawi was rated at CCC, a lot of progress has been made and it was therefore imperative that a fresh rating exercise be conducted to determine our current status.

To this effect, Fitch Rating Agency was engaged by Millennium Challenge Corporation to conduct the rating between 4th and 8th December 2006. Reserve Bank of Malawi as an implementing agency for Credit Rating for the country, successfully coordinated this exercise.
To begin with, it is worthwhile to mention that credit rating is an indication of the ability and willingness of a country to pay its external debt on the original terms. With a sovereign credit rating, the country is signalling to the rest of the world especially international investors its readiness to participate in the global economy by opening itself for public scrutiny and foster transparency in the collection and dissemination of information. A credit rating also helps to promote realistic monetary and fiscal policies and adherence to liberalization policies and reform efforts in keeping up with peer group countries and the global economy. Furthermore, the business world uses a sovereign credit rating as the benchmark to evaluate current and potential risks in a nation's economic environment they desire to invest in.

As alluded to earlier, many positive developments have taken place in Malawi since the last rating in 2005. Among these are cancellation of Malawi’s debt by both multilateral and bilateral creditors, the decrease in inflation rate and a reduction in interest rates.

The IMF and World Bank Boards on 30th and 31st August 2006, respectively, approved that Malawi had reached the HIPC Completion Point after making satisfactory progress in implementing its Poverty Reduction Strategy Paper (PRSP) for at least one year, and maintained satisfactory macroeconomic policies as evidenced by its performance under the PRGF. Furthermore, Malawi also met all the completion point targets in the area of economic governance and public expenditure management, safety nets, and microfinance.

Apart from receiving HIPC debt relief, Malawi also qualified for the Multilateral Debt relief Initiative (MDRI) which cancelled all pre-2004 debt to the World Bank and African Development Bank, and pre-2003 debt to the IMF. In October 2006, Paris Club creditors also agreed to cancel almost 100% of Malawi’s debt owed to them.

These developments, distinguished ladies and gentlemen, reduced Malawi’s external debt from 142% of GDP at the end of 2005 to 23% of GDP at the end of 2006.

Other external debt indicators also improved significantly.

Distinguished ladies and gentlemen, let me now turn to the monetary policy stance that was pursued in 2006. Monetary developments in 2006 were generally expansionary. The increase in money supply mainly arose from net foreign reserves on account of receipts for balance of payments support.

The increase in money stock was also partly a reflection of an expansion in credit to the private sector. It should be noted that since March 2006, credit to the private sector has been increasing steadily, implying that the February 2006 reduction in the Liquidity Reserve Requirement (LRR) was bearing fruit. This is in line with the economic program which allows for more credit to the private sector to boost economic growth. The Bank Rate was adjusted downwards from 25.0 percent to 20.0 percent on 13th November 2006. As a result, commercial banks followed suit by adjusting both their savings and deposit rates. The reduction in interest rates should, therefore, give an opportunity to the private sector to participate in borrowing capital, thereby generating economic growth.

It is also pleasing to note that the rate of inflation has been declining since February 2006. By December 2006, the annual rate of inflation declined to 13.6 % from 17.1% realised in 2005.

This was mainly due to:
• slowdown in food inflation as a result of a good crop.
• relative stability of the Malawi kwacha against other major currencies.
• lagged effects of a decline in money supply observed earlier in the year.

On the external sector, it is pleasing to note that foreign exchange reserves have been building up rapidly since the attainment of the HIPC Completion Point in August 2006.

Between September 2006 and January 2007, the country has been benefiting from inflows from various donor partners, including the IMF, the British & Norwegian Governments, the European Union and DFID because of good performance. As a result of these inflows, the country’s gross official reserves improved significantly.

Prospects for 2007

Let me now give you a picture of our expected outcome for 2007. GDP growth in 2007 is projected to grow by 5.6%, a slower growth from 8.5% in 2006.

• The agricultural sector is expected to continue leading this growth due to the on-going fertilizer subsidy program coupled with the current favourable rains.
• By December 2006, inflation rate had decelerated to 10.1 percent. In January 2007, the rate of inflation dropped to a single digit of 9.6 percent and it is expected that it would continue dropping further. This is mainly premised on the high food supply situation in the country (especially maize), that is expected to have a restraining effect on food inflation, which normally accelerates during this time of the year. The favourable outlook for inflation is based on the continued stability in food prices, the stable kwacha exchange rate and the easing of pressures on international oil prices.
• In 2007, growth in money supply will be closely monitored to safeguard and consolidate the declining rate of inflation and the overall financial system stability.
• The stability of the local currency will continue to depend on the flow of foreign exchange from the tobacco auction floors and the donor community, prices of petroleum products, as well as government’s fiscal discipline.
  

Distinguished ladies and gentlemen, this favourable outlook which I have outlined would assist the country to attain a higher rating at the end of 2007 compared to that of 2006.
The improvement in credit rating being officially announced today will assist in enhancing pricing and access to international capital markets. This would in turn enhance the inflows of private capital and hence increased investment. The goodwill that we have built with the international community will be further strengthened and this will ultimately signal that Malawi is a better place for doing business.
In conclusion, distinguished ladies and gentlemen, I would like to acknowledge the collective efforts played by all stakeholders for the success of the credit rating exercise. These include the Minister of Finance, Members of Parliament, Government officials, members of the private sector, the donor community and Non-Governmental Organisations.

to Fitch Rating Agency. Let me also applaud my staff at RBM for compiling quality data used by Fitch in the rating exercise, some of which was supplied by National Statistical Office and Ministry of Finance.

Finally, let me thank Casals and Associates through the Millenuim Challenge Corporation, for their financial as well as logistical support they have provided to make this Conference a success.
Thank you for your attention and God bless you.

France will this year cancel a US$9 million (K1।26 billion) debt Malawi owes that country, the French Ambassador to Malawi and Zambia Francis Saudubray said on Wednesday.

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