Possible dire consequences as political wrangling delays budget

The United Nations in Malawi has called on parliamentarians to urgently agree on a national budget, warning that failure to do so could have far-reaching effects on an already weak economy. Malawi's parliament adjourned last week after political tensions between the government and opposition parties came to a head over moves to impeach President Bingu wa Mutharika. The UN Office of the Resident Coordinator said on Monday that the "imperative of passing a budget" far outweighed the myriad of complex political problems facing the country. "Failure to pass a budget will be damaging to the economy and could have very negative consequences, particularly for the least advantaged and most vulnerable. The poor should not have to pay the price for difficulties in resolving political differences, no matter how legitimate these differences might be," the office noted in statement. The International Monetary Fund (IMF) Board is scheduled to discuss a request for a Poverty Reduction and Growth Facility (PRGF) arrangement next month, and the absence of a budget decision could bring major fallout in the shape of reduced investor confidence. "Unless a budget is passed by early July, this (IMF) meeting will not take place, and Malawi's request for resumption of the PRGF will not be considered. This will further retard Malawi's prospects for securing international debt relief," the office warned. Up to 80 percent of Malawi's development budget is provided by donors, and the country faces enormous challenges related to poverty, food insecurity, HIV/AIDS and the capacity to deliver services. Other consequences of failing to pass a budget could include a sharp devaluation of the Malawi Kwacha, inflationary pressure and even greater strain on foreign reserves. The UN urged the government and the Business Committee of Parliament to meet with a view to reconvening Parliament within 48 hours to continue discussions on the budget.