Malawi’s Catholic NGO laments rising domestic debt

The Centre for Social Concern (CfSC) – the social arm of the Roman Catholic Church in Malawi – has bemoaned the rising levels of domestic debt amidst failure by the central government to deliver quality services to citizens.

Journalists undergoing orientation on debt and right to food. –Photo by Watipaso Mzungu, Nyasa Times.
Abobo presenting the findings of the report to journalists.-Photo by Watipaso Mzungu, Nyasa Times

A recent report by the CfSC indicates that Malawi’s domestic debt is growing at an annual average of 51.8 percent with government expected to spend over 14 percent of the national budget to service the loans.

Additionally, the report says the country’s public debt stock amounted to US$5.03 billion by June 2019 (approximately K3,669.3 billion).

CfSC Communications Officer, Brother Vitus Danaa Abobo, bemoaned the development, describing it as worrisome and a serious threat to the growth of the economy.

Abobo made the remarks in Lilongwe on Tuesday when he opened an orientation meeting for journalists.

He stated that government’s insatiable appetite to brow is leading to the violation of the citizens’ right to a standard living, good health and well-being of self and of their family, including food, clothing, housing and medical care as espoused by the United Nations (UN).

“If this trend is not checked, more Malawians will be wallowing in abject poverty. And just as IMF [International Monetary Fund] states, Malawi needs wider structural reforms accompanied by prudent fiscal policies to reduce deficits and public debt,” he warned.

On the other hand, the report CfSC reprot says Malawi’s precarious food security situation is linked to its economic development challenges.

It says the assessment the Centre carried out through the Rural Basic Needs Basket Project in districts on kilocalories (energy) intake in rural areas revealed that over 80 percent of the households do not access the minimum of 2,400 kilocalories per person per day as per the World Health Organisation (WHO) standard.

The report further says Malawi has in place a rigorous institutional and legal framework that ensures that loans are contracted in the public interest, that there is sufficient fiscal responsibility, that they are consistent with the government’s economic and fiscal policy; and that there is financial ability to meet the debt obligation.

“What is weak or missing is the parliamentary oversight. It appears soon as the parliament passes the appropriation bill, there is little interest to follow up on implementation of the same,” it says.

The managing economic consultant at Mlomboji and Partners Consulting, Leslie Mkandawire, disclosed that domestic debt accounts for a large proportion of the total public debt with a share of 53.7 percent against external debt share of 46.3 percent.

Mkandawire said as of June 2018, external and domestic debt accounted for 50.6 percent and 49.4 percent, respectively.

“This reversal in predominance of domestic debt should send an alarm message to the authorities. Most of this debt is not investment related but rather consumption related. It will have no significant consequence on development and growth of the economy. Moreover the interests on this debt are very high,” he said.

He further stated that these are extremely high ratios, meaning that 65 percent of the burden on potential income generated in the economy is from debt.

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