Chithyola Banda: K100bn FDH Bank loan may breach public finance law
Malawi’s Leader of the Opposition has launched an explosive attack on government over claims it secretly borrowed a staggering K100 billion from a commercial bank without Parliament’s knowledge — warning the deal could amount to unlawful public debt.
Simplex Chithyola Banda demanded an immediate explanation after reports emerged that the Ministry of Finance had taken out the huge loan from FDH Bank to fund the National Food Reserve Agency (NFRA), in what he claims could be a flagrant breach of the law.
Raising the bombshell allegations in Parliament on Thursday, Chithyola Banda questioned whether the borrowing complied with the Public Finance Management (PFM) Act, 2022 — legislation that demands MPs sign off on any government borrowing before a single kwacha is contracted on behalf of the State.
“We are alarmed by reports that the Ministry of Finance has borrowed K100 billion from FDH Bank for NFRA without the approval of Parliament. This is a direct violation of Section 28 of the PFM Act 2022. K100 billion is public debt. Parliament must approve it,” he thundered before the House.
The opposition leader didn’t hold back, challenging the Minister of Finance to come clean on whether the loan had ever been approved by Parliament, or even featured in the 2025/26 National Budget — insisting Malawian taxpayers deserve full transparency over the country’s mounting debt pile.
Under the law, the Minister of Finance is barred from borrowing on behalf of government unless Parliament has given the green light through an Act of Parliament.
Every loan must either appear in the national budget or be signed off through a specific Loan Authorisation Act — while even government guarantees require MPs’ approval.
Armed with that legal ammunition, Chithyola Banda fired off a barrage of pointed questions, demanding to know whether Parliament ever approved the borrowing, where exactly it appears in the budget, and crucially, what interest rate, repayment period and collateral were attached to the mystery loan.
He also demanded to know why government had seemingly bypassed conventional Treasury financing in favour of commercial borrowing from FDH Bank — and whether NFRA itself was on the hook for the debt, or whether taxpayers were secretly underwriting it through a government guarantee.
“What are the terms? What interest rate will Malawians pay? Why FDH Bank? Was there competitive bidding? Is NFRA borrowing independently or is Government guaranteeing the debt? Malawians deserve answers,” he demanded.
The opposition chief went further still, insisting on full details of the maize procurement the loan was supposedly intended to fund — including exactly how much maize is being bought, the price per metric tonne, and when Malawians can expect it to arrive.
In an ominous warning, Chithyola Banda cautioned that if the borrowing had indeed gone ahead without parliamentary approval, it could constitute unauthorised government borrowing — a serious breach that could drag the transaction into the crosshairs of both the Auditor General and anti-corruption investigators.
He issued a stark ultimatum to the Minister of Finance, demanding a full and comprehensive explanation within just seven days — or face mounting pressure for a formal investigation by the Auditor General and the Anti-Corruption Bureau.
Government had not responded to the explosive allegations by the time MPs debated the matter in the House.
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