Latest report by Center for Social Concern (CFSC) shows that Malawi has a debt of about K3.3 trillion both locally and internationally as economic commentators say the rising fiscal deficits and debt threaten the current economic gains, a situation which could rob citizens of access to quality social services in the near future.
CFSC’s Economic Governance Programmes Officer Lucky Mfungwe said Thursday during leader’s orientation meeting with stakeholders in Lilongwe that a research conducted last December shows that 50 percent of it is domestic debt.
“The research revealed that on average, 14 percent of the budget is being used to pay loans domestically while one percent is being used on foreign loan,” Mfungwe told religious, chiefs and political party leaders.
He said this indicates that more money is being used to pay for the domestic loans than for services in critical sectors like agriculture.
Mfungwe said the rate at which the country is borrowing has negative implications on the Malawi’s economy as such the country will remain poor.
“This will happen because domestic borrowing uses market interest rate and it is very expensive while foreign rate is concessional,” Mfungwe said.
He, therefore, advised government to have the desire to invest and use the money that it borrows for productive reasons.
Furthermore, he urged government to involve citizens when borrowing so that they know what is happening because it is the citizens that pay back the loans.
“Let us ensure that all stakeholders are involved in all processes of borrowing.
“Parliament should also be used as a body to monitor projects meant for the debt, so as to ensure that loans are used for the designated purpose,” he said.
President of Zambezi Evangelical Church for Malawi, Zambia, Mozambique, Zimbabwe and South Africa pastor Hopeson Nyambo said the country needs to move forward.
“This country has a lot of resources that can be used to generate money for national development,” Nyambo said.
He said the county is not moving forward because of the debts and reiterated the need for members of parliament to realise that they have a responsibility to monitor the economic status of the country.
Ministry of Finance and Economic Planning public relations officer David Sado said there is a history to the debt stock in the country.
“In 2012, the devaluation of the kwacha translated into a debt growth in kwacha terms. Similarly, post cashgate effects led to withdraw of budgetary support by partners,” Sado said.
He said, with all these factors around, government had to continue providing social services to various sectors leading to local borrowing.
“Borrowing externally is on concessional terms and is possible especially on projects with high impact to the country; that is why government borrows internally on minor projects,” Sado said.
However, he said, government has put measures to make sure that debt is sustainable.
For instance, he said, the ministry conducts a debt sustainability analysis every year which updates policies and guidelines on debt.
“In addition to that, we have a medium debt term strategy which aims at reducing the prevailing debt,” he said.
Mfungwe said because the resources are being used for consumption purposes, eventually, there will be no meaningful investments made out of the rising domestic debt.Follow and Subscribe Nyasa TV :