Malawi Parliament Reveals Govt Loans Are Not Trickling Down to Ordinary Malawians

3 August 2021

Chairperson for the Budget and Finance Committee of Parliament, Gladys Ganda, has expressed disappointment with the tendency by the government to use ordinary Malawians as pawns in justifying loans it get from various financial institutions.

Ganda observed that 'literally none of the money' the Malawi Government has been borrowing over the decades has trickled down to overburdened taxpayers.

The Democratic Progressive Party (DPP) Member of Parliament for Nsanje Lalanje made the lamentation in Lilongwe at the launch of a new project, which the Malawi Economic Justice Network (MEJN) has initiated with financial support from Open Society for Southern Africa (OSISA).

Through the project, which is titled 'Fostering Transparency and Accountability in Public Debt Contracting Management in Malawi', MEJN seeks to foster social accountability in debt contracting and management so as to inspire the government to curb its borrowing appetite and contract debt on sustainable basis.

And in her remarks, Ganda expressed concern that Malawians continue to languish in abject poverty yet the government borrows huge sums of money in the name of improving the social and economic livelihoods of the citizens.

"We recently conducted a survey to assess how these debts are being transforming the lives of the intended beneficiaries, but we found that none on the ground," she said.

Ganda further lamented the meagre resources her Committee gets, which she said is a deterrent to its oversight role on all financial bills that are approved by Parliament.

She called for the amendment of the Public Finance Management Act (PFMA) to ensure that the Act empowers the Budget and Finance Committee to discharge its mandate more efficiently by, among others, asking specific reports from Ministry of Finance.

The Budget and Finance Committee of Parliament is mandated to scrutinize government domestic and international borrowing policies and to scrutinize reports on financial and economic issues and policies of the government, including statistical information relating to international financial agreements.

Ganda, therefore, applauded MEJN for involving Parliament, through the her Committee, in launching this project.

"As you are all well aware, the country has been operating under large budget deficits, which have substantially increased the risk of debt distress as we resort to borrowing to finance the budget. In the current nine-month public debt charges continue to exert pressure on expenditures, claiming 15 percent of the total national budget. More specifically, over the nine-month financial year, government expects to borrow MK718.32 billion. This means 36.1 percent of total expenditure will be financed through borrowing, which is an increase from 34.8 percent in the 2020/21 budget," she said.

Ganda added, "These figures are worrisome and even more worrisome is the country's total debt stock, which currently stands at MK4.7 trillion (which is 54 percent of GDP). I, on behalf of the Honourable Members here present and my own behalf, would like thank the Open Society for Southern Africa (OSISA) for funding MEJN in the implementation of this important project which will promote transparency and accountability in public debt contracting and management in the country."

MEJN vice chairperson Jeff Kabondo concurred with Ganda, stressing that debt repayment is choking delivery of public services in Malawi.

However, Kabondo expressed delight with the strides the 'current administration has already started making some strides to reduce the debt to a manageable status and commit most of our budgetary resources towards investments and provision of quality services to our citizens'.

"We believe that this is a move by government towards taming its appetite for borrowing and try to live within its means for this is the only way we can achieve meaningful development and attain the Malawi 2063 aspirations," he said.

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