Malawi's new economic pledges

President Bakili Muluzi's government has been criticised

Malawi's government is under pressure to clean up its act, following the suspension of vital loans from the International Monetary Fund (IMF). The Malawi parliament has now unanimously passed a bill to borrow $50m (£31.6m) from the World Bank to cushion the country's worsening food crisis, while finance minister Friday Jumbe has introduced a series of cost-cutting measures.

By Raphael Tenthani in Lilongwe

The IMF suspended its financial support amid concerns over the government's spending, under President Bakili Muluzi.

Aid agencies say between 3.2 million and 3.6 million Malawians are on the verge of starvation because of both the drought and alleged government mismanagement of grain reserves.

But Mr Jumbe, reading from a cabinet white paper, gave journalists a list of measures that would reduce spending and help the government to operate within its budget.

The IMF has said it will resume the crucial loans to Malawi once the country has dealt with its rising wage bill and high spending.

Tightening purse strings

Mr Jumbe's cost-cutting measures include cutting down on building projects, reducing the number of Malawi embassies, and trimming government departments.

The white paper also proposes to reduce government travel and to cut the wage bill by 50m Malawi Kwacha (about $600,000m; £380,000m).

Other proposals include using the 'maize levy' - which is collected on every litre of fuel motorists buy and usually used as a safety net fund - for general budgetary expenditure.

The areas usually funded from these so-called safety nets, such as buying food or medical drugs in times of emergencies, will now be funded by the World Bank loan.

Toll fees will be introduced on the country's roads by next month and there will also be an increase in licence fees for vehicles.

The finance minister announced last week that Malawi would close its embassies in France, Namibia and Kenya and reduce staff in other embassies.

He said the closure of the three embassies was just the beginning, saying the government's grand plan was to retain only 10 important missions abroad.

Mixed reaction

Reaction to these measures has been guarded.

Girma Begashaw, the IMF's resident representative in Malawi, said that while the measures sounded good on paper the key word was implementation.

Heatherwick Ntaba, treasurer general of the main opposition Malawi Congress Party agreed that expenditure needed to be controlled, but said some of the measures introduced - including the toll fees and the hike in vehicle licences - would only serve to "squeeze already poor Malawians even further".

Dr. Ntaba said what the government needed to do was to stop corruption and fraud within the government which he claimed was costing millions of Kwacha every year.