Malawi domestic borrowing should be tamed, govt cautioned on perpetuating poverty
Malawi government has been advised to tame the borrowing appetite by cutting wasteful spending and focusing key areas following revealations that the country’s debt is set to rise by 473.6 percent as government plans to borrow about K176.1 billion in the next fiscal year starting on July 1 compared to K30.7 billion in the revised 2017/18 National Budget.
According to Reserve Bank of Malawi figures as of December 2017, the country’s public debt is at K2.4 trillion – representing K1.4 trillion external debt and K1.2 trillion domestic debt.
In a presentation to members of Parliament and stakeholdres during a Budget Analysis Open Day in Lilongwe on Monday, Malawi National Assembly public finance analyst Mphatso Elias Ackim said the government “needs to control expenditure which tends to develop into unsustainable debts which will adversely affect the economic outlook.”
He also said there is need to “increase revenue collection.”
Ackim pointed out that although the debt situation is within sustainable levels, the government should be mindful that “the country may register unsustainable debts and the surge in domestic borrowing may result in unsustainable debt and the crowding out of private sector investment.”
Said Ackim: “Government borrowing has soared by 32.26 percent from the revised 2017/18 estimate of K183.6 billion to K242.9 billion estimate for the 2018/19 financial year.
“Whereas foreign borrowing has declined by 56.3 percent from the revised estimate of 2017/18, domestic borrowing has skyrocketed by 473.6 percent from K30.7 billion in the revised 2017/18 to K176.1 billion in the 2018/19 financial year.”
He said the increased borrowing can have adverse implications on lending rates and access to loanable funds by the private sector.
“The government must tightly control expenditures by ministries and parastatals to avoid fiscal slippages which may force government to borrow. Interest payments alone are absorbing 11 percent of the national budget,” he said.
Budget Director in the Ministry Finance, Peterson Ponderani said public finance analysts need to balance issues of borrowing and expenditure “realistically.”
“Some of you are asking government to minimise on domestic borrowing, yet you are also asking government to increase expenditure. We must balance the two realistically,” he said.
Minister of Finance, Economic Planning and Development Goodall Gondwe has on several occasions defended Malawi’s debt levels, describing them as manageable.
Malawi’s leading daily, The Nation, in an editorial comment on Tuesday pointed out that borrowing itself is not bad, especially when it is for investment. But the paper said it smacks of “grosss inrresponsibility” when a government will be forced to borrow simply to pay chiefs increased honoraria or indeed swell the number of Farm Input Subdidy beneficiaries.
“We share sentiments that borrowing appetite should be tamed,” the paper said.
It pointed out that unnecessary borrowing risks mortgaging the country , a situation that will stifle growth as future generations will be burdened with debt repayment – a situation that will perpetuate impoverishment in Malawi.
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Forget this DPP-led government will ever listen to your expert advice.
Matchonas have typical characteristics. Mukaone even timatchona takumudzi.
These are: 1. Arrogance.-feeling of sellf- importance & grandiosity. 2. Selfishness & greed- kudzikukira, insatiable appetite (gogo kuziphikira tea kumwa kokha tiana tikuona apo). 3. Narcissism-kudzimva aliyense is inferior, ndakhala kunja ine mukudziwa chani? 4. Crookedness- despite being mazigogo they are not straight in their dealings, the list is endless.
Go research on all matchonas kumudzi, then compare and contrast with dp gurus.
SHAME on MBAVA ma ZIGOGO!!!
The ruling party (and most of our MPs sitting in parliament) are approving these long term loans, with very high interest, in the knowledge that they won’t be alive when Malawi isn’t able to generate enough cash to service these loans. Malawi is currently generating MK1,2 billion a year and probably half of that will go to servicing loans. By the end of 2024 Malawi would have borrowed more than the cash it generates. My fellow Malawians, can you not see? Here we are arguing about which party is going to win the stupid elections. Things that matter are not… Read more »
Us who live in the constituencies have not asked any of the MPs to borrow money. Government is borrowing for who? For what? To pay Bwana Chiefless Chief Lundu? Nganga, kapume usafere mu Parliament. Goodall please go and rest, it’s high time. Do you hear?
No sane citizen would think of maintaining this careless, clueless and irresponsible Govt beyond May 2019. That would be a catastrophic tragedy for Malawi.
It is only a bankrupted mind that borrows money from the bank to buy monthly groceries. It is a tragedy for Malawi Minister of Finance to borrow funds for the recurrent expenditure budget. Even at MK2,4 trillion debt levels, Malawi will be left bankrupt by the time DPP is no longer in power in 2024. It doesn’t take a genius to figure that one out.
In 2024? At this rate, let’s hope not!!!
Point of correction 2019. Why should we keep them that far; that’s a tragedy.
Apparently there are a lot of foolish Malawians who still hold DPP in very high esteem. Like an abused spouse, they will vote for DPP in May 2019.