Think of the burden on our children and grandchildren. This is a message resonating from the National Association of Smallholder Farmers in Malawi (Nasfam) concerns over the rising debt levels by government reportedly at K2.4 trillion.
Nasfam chief executive officer Betty Chinyamunyamu observed that the government is borrowing a lot to service projects that have no impact and are poorly designed.
“We are borrowing a lot since 2006 and the debt has been going up significantly every year,” observed Chinyamunyamu.
The development is worrying as a significant amount of the budget and foreign currency is shipped out of Malawi to repay the foreign debts owed to multilateral and bilateral creditors when such resources should have been reinvested in the country while shoring up its balance of payment position.
Nasfam boss told parliamentary committee of Budget and Finance that 18 percent of the total national debt stock is for irrigation projects “which haven’t shown any impact yet as loans are mostly used to pay allowances to officers than the actual implementation.”
Chinyamunyamu said this negatively impacts the cause the loans are borrowed for “because they seem not to work out.”
She said the rising national debt is affecting the private sector which service exorbitant interests.
Parliamentary Committee on Budget and Finance, Rhino Chiphiko, expressed concern especially about the Chinese and Indian loans because Malawi government was not transparent on how they were contracted.
“These loans were approved as a blanket by the then Parliament. They were in phases, but up to now government has not come in the open to say how much we have used and how much remains because I am sure interest rates must be very high,” said Chiphiko.
He urged government to slow down on contracting new loans to allow Parliament to scrutinise the current debt portfolio.
According to Chiphiko, some loans did not make sense, citing the borrowing from China to build the Presidential Villas and hotel in Lilongwe and wonder “what it is that Malawians are gaining from the Presidential Villas because at the end of the day it is Malawians, not the infrastructure, who are going to repay the loans through their taxes.”
The K2.4 trillion debt is harmful to the nation against a background of K1.1 trillion national budgets which parliament approved.
Economic commentators have expressed concern that government is mortgaging the future of this country through debt.
World Bank states that Malawi’s public debt has increased sharply over recent years with servicing costs now close to levels recorded prior to the 2006 debt relief.Follow and Subscribe Nyasa TV :