Malawi NGOs caution gov’t on borrowing, against JB’s Mudzi Trust

Five Malawian NGOs under the banner Governance Platform (GP) have urged government to be cautious with the level of borrowing to avoid accumulating debt stock arguing that they find the reason for the shift from domestic borrowing to foreign borrowing as an insignificant effort to the call to live within our means.

Total revenues and grants for the 2013/14 financial year are expected to amount to K603.4 billion from K460.9 billion the previous year.

The overall fiscal deficit for the 2013/14 fiscal year is thus projected at K34.8 billion. This deficit will be wholly financed by foreign borrowing amounting to K42.0 billion.

Part of foreign borrowing will also finance domestic debt repayment of K7.2 billion which in turn will reduce the domestic debt stock from K170.6 billion at the end of 2012/13 financial year to K163.4 billion at the end of the 2013/14 financial year.

Kondowe: We are concerned
Kondowe: We are concerned

They also warned government to be cautious with donor aid as any lack of concrete commitment from donors may render the national budget extremely difficult to execute.

“On one hand, we urge the donor community to fulfill its resource commitments for 2013 and beyond in order to support faster stability of the exchange rate and moderation of inflation. On the other hand, we also urge and insist that Government should find concrete strategies to reduce donor dependency both in the medium and long terms,” Governance Platform said.

Malawi’s bilateral and multilateral donors have pledged for financing the budget to the tune of 41 percent of total expenditure equivalent to K240.3 billion.

“This is in line with other suggestions that Malawi should reflect and move with speed to reduce donor support through good, consistent and sustainable monetary and fiscal policies,” the NGOs said.

GP comprises of Catholic Commission for Justice and Peace (national), Centre for Social Concern (CFSC), Civil Society Education Coalition (CSEC), Malawi Health Equity Network (MHEN) and Malawi Justice Economic Network (MEJN) that are currently implementing programmes to advance good governance in Malawi.

The 2013/14 fiscal year, national budget currently under deliberation in Parliament, is anchored around “No Net Domestic Financing” premised at reducing the domestic debt stock to allow the private sector space to borrow at reasonable rates for productive investment.

“We are concerned that Government is not doing much to reduce the level of borrowing. We note that while efforts are being made to stop domestic borrowing and repay domestic debt stock of about MK170.8 billion, it appears that Government’s shift to foreign borrowing currently estimated at K42 billion puts to question its commitment to long term fiscal sustainability,” Governance Platform observed in a statement.

And speaking at aa news conference in Lilongwe, the activist  also said they are worried with the incorporation of some initiatives in the budget,  saying President Joyce Banda’s Mudzi Transformation Trust initiative as a duplication of existing government projects, arguing implementation will drain public resources and overburden taxpayers.

“Mudzi Transformative Trust is a duplication of the Local Development Fund (LDF) and COMSIP projects. As a platform we believe that any serious Government needs to be sensitive in avoiding efforts that are rather a burden to taxpayers, as this may be construed to be politically motivated ahead of the 2014 polls,” said Csec executive director Benedicto Kondowe .

“As a platform, we believe that any serious government needs to be sensitive in avoiding efforts that are rather a burden to taxpayers.”

The CSOs also attacked government for lack of transparency on the performance of the mining sector despite being earmarked as key for economic growth.

The President launched the Mudzi Transformation Trust on May 24 this year as a vehicle which will bring development to rural masses by creating ideal villages which will have potable water, good houses, good food, access to roads and growing social economic status.

The activist urged government to ensure that any new initiative should be based on wide consultation and empirical evidence to justify its relevance and the prospects gains and returns on investments.

“We reiterate the calls for the establishment of the National Planning Commission. This will help to bring order in the borrowing of loans, as currently there are some initiatives (such as Mudzi Transformative Trust and one family one cow) that are not only suspicious but also not pressing priorities worthy investing on though politically popular. We need choices and decisions that transcend political considerations,” Kondowe said.

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