World Bank bashes Malawi govt subsidies, excessive borrowing

The World Bank has described the Malawi government bankrolled subsidies as inefficiencies that are worsening the economic situation.

Finance Minister Gondwe: Gloomy outlook

Finance Minister Gondwe: Malawi government has drastically cut on borrowing

However, the bank’s Malawi Economic Monitor, a by-annual newsletter has not said whether the government should abolish the subsidies or not.

The World Bank statement came as opposition parliamentarians in the National Assembly on Tuesday called on the government to discontinue the malata and cement subsidies programme and relocate the resources to the collapsing public education sector.

Donors and local experts are also increasingly putting pressure on the Peter Mutharika administration to find an exit strategy for the popular farm input programme but has been rocked with problems due to the prevailing economic climate.

The newsletter, entitled ‘adjusting in turbulent times,’ accuses the government of excessive borrowing, saying the government has borrowed four times the amount agreed in the national budget and asked the government to adjust massively if the current economic situation is to be reversed.

“Policy makers should tighten expenditure and adhere to budget ceilings,” says the World Bank newsletter in part.

The Bretton Woods institution also laments huge wage bill in government.

Finance minister Goodall Gondwe at an economic symposium on Tuesday in Lilongwe organised by the Reserve Bank of Malawi, however said the government has drastically cut on borrowing through treasury bills, saying infact, the government had not borrowed.

Gondwe was upbeat Malawi would be back on track on extended credit facility come February, a move that will bring back donors.

But economics professor at Chancellor College Ben Kalua said economic fundamentals clear show the government is over borrowing saying it is now issuing two year bonds.

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Biti NAC
Guest

Hire Mbendela kkkkkkkkk the Arsehole who put us in this mess! Stupid Dpp

Chizeleza Ngwira
Guest

Peter Mutharika should hire the Right People for Critical Economic Positions not stupid Yes Bwana Lhomwes

Balamanthu
Guest

Malawi government officials should constantly be reading Proverbs chapter 22 verse 7

akuntinji anamuona
Guest
The problem is see here is misplaced opposition from the rich trying to surpress the poor in trying to serve the economy. They receive millions as their salary and they want to take that belongs to the poor for their figures improvement. Surrender your riches to the poor and lift them up to the level where they can buy using free market prices. Let’s not advocate issues because we are on the better side and we can afford. What you should know the little subsidy we get it assists us a lot. You have plenty with your books, how many… Read more »
Jimbo
Guest

The Malawi Kwacha is currently trading at MK902 to £1 GB. This means that MK1 is worth nothing! At the time of the change over in 1971 the kwacha was worth 50pence or MK2 to £1. So much for independence. Kamuzu, Muluzi, Bingu and now APM have ruined the economy of Malawi.

Prince Edward rsa
Guest

With dpp as agovernment malawians must expect more and very dengerous problems ahead.Dpp is aparty with bad record since the dawn of democracy udf messed but dpp doubled it stealing 577billions this is too much.

Tione
Guest
The problem the government just borrows money and diverts it into very few people’s pockets and not for the intended purposes. They don’t even bother to pay back ndiye ma arrears ali thoooo! When they borrow next, they use the money for the repayment of previous loans not on the projects for which they lied to be borrowing. This way, can the country develop? Kumangodziwa kungongola koma kubweza ayi. Ana a Malawi akufa ndi njala, mitengo ya zinthu itakwera. Bolanso mu nthawi ya Kamuzu he was making sure prices of commodities were the same countrywide. Pano aliyense akugulitsa zinthu pa… Read more »
Kumamvetsa
Guest

Those who comment try to understand roll of World Bank.
It’s not a donor. It’s an organization composing all countries, Malawi included
One of the World Bank is to offer advice to member countries. Is up to Malawi to take the advice.

But simple economics tells us that its not prudent for any reasonable governments to keep on borrowing. You should not be spending what we don’t have

Phinifolo
Guest

Zinali zachidziwikire izi. Munthalika satha chilichonse, koma munamusankha nokha. Ndiye ndizimenezotu.

Dumisani
Guest

Tell them bro George

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