European Union Ambassador to Malawi, Alexander Baum, says the country should not expect special international aid to help it address its economic problems, saying there was still need for the country to rebuild its damaged image among development partners for it to be trusted again.
Speaking after presenting his key note address at the official opening of the Society of Accountants in Malawi (Socam) Lakeshore Conference in Mangochi on Thursday evening, Baum said it was unlikely that donors would give Malawi a rescue package to address its problems.
"Why should donors help Malawi address problems it created by itself?" asked Baum while answering a question from one of the Socam members on the need for donors to give a preloaded rescue package to Malawi.
"Malawi still needs to put its house in order," said Baum in his prepared key note address.
He said the political class as a whole needs to be genuinely guided by a strong commitment to the future of the country.
"They [political leaders] have to be committed to a rules-based society and be less guided by the access to resources through a political process," said Baum.
However, Baum said Malawians should not expect special donor support since the international community was still looking at Malawi apprehensively.
"Malawi has to rebuild confidence [among donors]," said Baum, adding: "It's not just a matter of changing government. To the international community, Malawi remains the same country regardless of whether there is a new government. The image remains the same."
He said donors had not given Malawi a raw deal as some commentators were suggesting, saying aid has its limitations.
"It is important to understand that development partners are helping within the framework of their programmes, not with a rescue package of significant fresh money," said Baum.
He said mobilisation of money takes time and remains limited to pledges.
"There is no raw deal," said Baum, adding: "In fact, there is no deal other than the ECF [Extended Credit Facility of the International Monetary Fund].
"Government did what it had to do [devaluation]. It took bold and risky but right decision," he said.
He said the devaluation and other reforms government implement were not done to please donors but because they were necessary.
In any case, Baum said what the donors have so far disbursed to Malawi was in accordance with the schedules provided when the programme with the IMF was being negotiated.
Baum said although government and development partners have agreed on a reform plan to be supported by a multidonor trust fund, there were still concerns about the political and civil service will to allow swift implementation of the reforms.
He said the confidence of development partners into the country is very much linked to the seriousness with which the public finance management system is revamped.
He said apart from donors getting political bashing at the time they splashed aid to Malawi between 2007 and 2010, Malawi has failed to successfully complete many programmes with the International Monetary Fund.
Baum warned that healing of the Malawi economy will take time and that the country will experience some more difficult months ahead with the lean period coming.
He said the turnout of things may be more difficult than Malawians expected as the situation has in part been aggravated by shortages of food in some parts of the country.
"It is however critical to sustain the reform policies in order to achieve results," said Baum, adding: "It is important to contain inflation and devaluation but not by changing medicine."
He said discipline in public expenditure is a key element in the equation.
"As you will know, the worst thing you can do is to stop your antibiotics treatment after one or two days because you are no longer sure about the treatment. When you do that, it [the medicine] will not work again," warned Baum, in apparent reference to media reports that government was contemplating going back to a fixed exchange rate to tame runaway depreciation of the kwacha.
He said Malawi had no choice but devalue and liberalise kwacha as that is the only way the economy can be healed.
"Yes, it would have been better to have a comfortable reserve cover [at the time of devaluation]. But where would this have come from?" wondered Baum.