Malawi told to return EU money

The European Union (EU) has asked the Malawi Government to refund at least 8 million euros ($8m) that the government diverted from its intended use before 30 August.

EU head of delegation in Malawi Wiepke van der Goot told the BBC on Wednesday that the EU was demanding its money back because it was used for what he termed as "ineligible expenditure".

The money was initially meant for a road construction project in Blantyre but, according to a joint EU/Malawi Government audit, the money was either used for other unapproved projects or was misappropriated.

Malawi is in desperate financial plight and in the grip of a devastating drought which has swept across Southern Africa.

Several months ago Denmark halted aid to the impoverished nation blaming political intolerance and corruption.

And the International Monetary Fund is withholding $47m of the $55m earmarked for Malawi due to concerns about possible corruption and poor management.

Delay

Mr Van der Goot said the EU recognised that Malawi was in dire need of aid but if agreed measures were not respected, he said, "we will be forced - against our wishes - to delay further budgetary support to Malawi".

Finance Minister Friday Jumbe confirmed that the EU had asked for a refund but described it as "normal".

He told journalists the government was ready to refund the money.

The EU has approved a 345 million euro package for Malawi to be spread over a period of five-years, but the new money will not start flowing until after the current problem is resolved.

According to EU food advisor for Malawi Paul Ginies, the EU has already approved a 95,000 metric tonne donation of maize for Malawi where an estimated 3 million people are facing starvation.

And some of the maize, according to Mr Ginies, has already started arriving.