Malawi cannot construct a new airport at Chileka or increase power generation capacity without borrowing funds therefore the recent announcement by President Peter Mutharika to borrow $1.5 billion (K817.5 billion) from China to fund several infrastructure development projects, is a wekcome development, Economists Association of Malawi (Ecama) has said.
The loans would be obtained from the Exim Bank of China.
“If we don’t borrow, will we be able to construct an airport? It is a fact that we cannot raise our own resources and the loans will be for good intentions such as Blantyre District Hospital. Only if we were borrowing for consumption, then we would be in trouble,” Ecama executive director Edward Chilima said.
Economist Chilima is quoted in The Nation newspaper saying comparatively, the public debt levels in relation to the GDP was currently on track.
Among the Chinese projects is a 300 megawatts (MW) Kam’mwamba coal-fired power plant with a project cost of $667 million (about K387 billion) to be implemented by Gezhouba Group Corporation Limited of China.
The other projects the President announced include the National Identity Cards (IDs) project worth $50 million (about K29 billion) and construction of a new Chileka International Airport in Blantyre at the cost of $285 million (about K165 billion).
Ecama director has since asked the government to enhance domestic resource mobilisation so that our consumption budget is taken care of with domestically generated funds..
Meanwhile, the newspaper reports that Minister of Finance, Economic Planning and Development Goodall Gondwe would table Loan Authorisation Bills in Parliament in due course
Nations Msowoya, Ministry of Finance’s spokesperson would not go into specifics of the loans such as repayment period and interest rates, but said the terms of Chinese loans were “standard”.