Horror of Malawi rising debt worries Nasfam: Govt mortgaging future of the country
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.
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loans are very useful when setting a plan of recovery to the economy, but not if you are only consuming them in ways that won’t bring any return out of it. lets talk about just some of the issues costing this country millions and billions of money without pointing fingers, Electricity, we have to spend useless money everyday just by going to the market everyday coz we cant keep anything anymore in the fridges, visiting markets everyday is costly, transportation & fuel expenses arent cheap. Welders, Barbers, factories cant be productive to the best of their potentials any more,, yet… Read more »
This woman has got both the beauty and the brains!
finally, we have a voice of reason, tell them girl, so proud of you1
Malawi for sale
There is need to make an economic use of these Presidential villas to caution loan repayment otherwise they will be there for no good cause when they remain idle
What economic activity do you have in mind? Hotel services? How many people can afford hotel services in Malawi? Olo ma bwana even ministers they are usually sponsored by Government or NGOs. Otherwise most of us would rather use that money for something more important or crucial needs in our lives. Use a cheap lodge if money is from one’s pocket. The fact is these dpp thieves have just experts of poverty creation in Malawi. Of course them only and indeed their close nepotistic cronies are financial beneficiaries from such crooked loans and fake mediocre projects. It’s like at a… Read more »
We hired wrong leaders, unexperienced and ignorant.