Malawi stand to lose World Bank loan

Malawi stand to lose the World Bank loan on the Malawi-Mozambique Connector project if President Bingu wa Mutharika will not call for parliament within the 17 days , the remaining period of the 90 days of the Bank's approval on the said loan.

The Bank approved US$ 48 million for the Malawi-Mozambique Connector project on July, 17, 2007 and the 90 days period is likely to end on October 16, 2007.

The Mozambique-Malawi Transmission Interconnection Project, the second phase of the Southern African Power Market Program, will connect Malawi to the Southern African Power Pool (SAPP), allowing two-way energy trade between the two countries. Information obtained on the World Bank website indicated that the project would ensure much-needed diversification in Malawi’s electricity supply and allow the export of any off-peak power surpluses saying it will also provide Mozambique’s energy sector with a new revenue source.

However, President Bingu wa Mutharika, on September 14, 2007, invoked Section 59 (1b) of the country’s constitution that empowers him, in consultation with the Speaker of the National Assembly, to prorogue parliament which was expected to deliberate and pass the bill.

Mutharika justified his action saying the opposition Members of Parliament were refusing to deliberate some important bills opting for the implementation of Section 65 of the constitution. He also accused members of parliament of spending K310 million in the four months they have been meeting.

World Bank's official Janique Racine for Africa Region responding to Malawi News questionnaire said following the prorogue of parliament the project cannot become effective and the Bank cannot release funds as yet.

Racine said as part of Government clearance process, legal agreements may have to be ratified by a country's legislature and certified that the agreements are legally binding on the state.

“The bottom line is funds cannot be released before all the conditions of effectiveness are met and country processes are completed, which is normally expected to be within 90 days of Board approval.

“The executive branch of government took it to Parliament for authorization. We have seen that Parliament has not yet approved because the Parliament session which could have done so was prorogued. This means the project cannot become effective and the Bank cannot release funds as yet.” she said.

She said once parliament authorizes the agreements and a legal opinion is received by the Bank certifying that the agreements are binding on the state, a ceremony will be organized to sign the funding agreement.

“For example in Malawi an Authorisation Bill is passed by Parliament. This country process may last up to several months.This process must be satisfactorily completed along with any other conditions of effectiveness, before the loan or credit is declared effective, and ready for disbursement.” she said.

Racine said she would not tell what would happen after the elapse of the 90 days because; "Usually it happens within the 90 days, maybe the country might ask for an extension.”

Minister of Finance Goodall Gondwe said the proroguing of parliament would delay the implementation project that would also affect the provision of electricity.

Gondwe said failure to authorise the bill affect the implementation of the project but was quick to say that there was nothing government would have done.

“We will just wait and see. It is the opposition that rejected to discuss the bills. Of course this will delay the implementation of the projects,” he said.

Gondwe said the bill would be put forward for the next sitting of parliament which he said he did not know when next seating was expected to be called.

Former Finance Minister Friday Jumbe, who is also UDF spokesperson on finance matters, said government shot itself on the foot when it prorogued parliament before money bills were authorized.

Jumbe cited electricity interconnection and improvement of water supply as some areas that would suffer because of the decision to prorogue parliament.

“The issue might not have an impact right now but they will affect the other budgets to come. Government is delaying itself in implementing these projects,” he said.

Legal Affairs Committee of parliament wrote the World Bank on September 20, 2007 asking it not to recognise bill number 8, purportedly urguing that president Mutharika signed for the bill before parliament passed it.

Racine confirmed the Bank receiving the letter from Legal Affairs Committee of Parliament but said they would not act upon it because the Country Manager Timothy Gilbo was not in the country.

An economist at Polytechnic, University of Malawi constituent college, Abel Mwanyungwa said by proroguing parliament it meant government would not be able to borrow money from international organizations and government.

“If government is to go ahead to implement the said projects that would mean government has to borrow money locally and unfortunately this will mean the increase in inflation and definitely going back where we are coming from,” he said.

At the time of proroguing 39th session of parliament eight bills were on the order paper. Other bills that has also been affected due to the prorogue of the houses included Bill 14 on security, Bill 17 on national registration, Bill 15, Penal Code amendment, Bill 16 on police Bill 4 and Bill 13 on constitution amendment and also local government election amendment bill.

Parliament was also expected to discuss the appropriation of Value Added Tax bill and Taxation amendment as well as confirmation of the Auditor General and Chief Justice

Solicitor General Anthony Kamanga said there was nothing that would be done apart from waiting for the bills to be re-presented in the next seating of parliament.

“Some of the bills are not new, they were formulated last year so they would be presented at any time,” he said.

However Malawi Watch Executive Director Billy Banda called upon government to recall parliament stating that there were a number of important bills that needed the attention of the house other that Section 65.

“Section 65 can be handled whether parliament is in session or not but there are other necessary issues that need disposed urgently,” he said.

Banda cited the impending approval of the Chief Justice and Auditor General and the appropriation of the taxation bills.

“Government business has to be finalized,” he said.

The 39th session has been characterized by adjournment including a one month mourning period of the demise First Lady Madame Ethel Mutharika and the disagreement on the priorities on what was to start between passing of the national budget and the declaration of seats vacant of members of parliament that were deemed to have crossed the floor following a June 15, 2007 Supreme Court Appeal a landmark ruling on Section 65.