Malawi’s demostic and external debts currently pegged at about K1.5 trillion and US$2 billion respectively, are considered to be soaring abnormally high, a situation which is worrying various stakeholders.
These debts, accumulated in the period between 2007 and 2018, are coming after a historic debt relief for Malawi in 2006 which has allegedly never benefited poor taxpayers in the country.
This was disclosed on Wednesday in Lilongwe during the dissemination of findings of a study on debt management in Malawi which was done by Centre for Social Concern (CSC) and Mlomboji and Partners Consulting.
According to the study, Malawi has signed over 80 loan agreements during the period 2007 and 2018 mostly with bilateral partners such as China and India.
A consultant at Mlomboji and Partners Consulting, Leslie Mkandawire described most of these bilateral loans as being not as concessional as multinational debts.
He, however, noted that these loans still need to be serviced and exert pressure on taxpayers who are shouldering the burden of repaying them.
Mkandawire said it is even more sad when such loans are not translating to any tangible development.
“Of course, borrowing is not bad for a developing country like Malawi which needs more money to develop. All we are saying is that debt should not be too much that it should plunge people and their generations into bondage,” he said.
Mkandawire called upon various stakeholders including Parliament and civil society to monitor the acquisition and management of state loans, saying leaving it to the executive alone may lead to misuse of such loans.
Taking his turn, Vice-chairperson for the Budget and Finance Committee of Parliament, John Chikalimba condemned government for what he termed as irresponsible debt accumulation.
“You do not expect the country to recover from poverty and develop with this excessive borrowing,” he stressed.
Human rights activists Timothy Mtambo and Billy Mayaya also expressed their misgivings over Malawi’s high indebtedness, saying it is very unfair on a people that are struggling everyday.
Figures from Treasury show that prior to 2006, the country’s external debt stock was about $3 billion, an equivalent of 150 percent of GDP.
Prior to Heavily Indebted Poor Countries (Hipc), the external debt level was slashed from 90 percent of GDP to 8 percent in (actual) present value.
The debt stock fell drastically to just under $500 million, representing an 11 percent drop, thanks to Hipc initiative and the Multilateral Debt Relief Initiative (MDRI).
The soaring external debt means that the country in the last 10 years has spent money it could have spent on roads maintenance (K16 billion), health sector (KK37 billion), education sector (K25 billion), agriculture sector (K4 billion), elections (K11 billion) and maize purchases (K35 billion), if we are to go by the 2017/18 approved statement.Follow and Subscribe Nyasa TV :