The Malawi Local Government Association (Malga) has expressed excitement with the decision by the Central Government to sanction audit of debts in the councils, a process that will pave the way for a bailout package for the councils.
Cumulatively, the councils owe various suppliers and service providers in excess of K14 billion, which they have failed to settle due to inadequate funding.
Recently, MALGA executive director, Hadrod Zeru Mkandawire, decried the absence of a bailout package for the councils in the 2021/2022 national budget, warning that this would make the councils remain in perpetual debts that would render them more ineffective.
The Minister of Finance Felix Mlusu might have heeded the warning as he announced this week that the government has started auditing debts in all local councils in order to determine ‘whatever are certified to be the correct amount of arrears’ for each council to pay suppliers.
Mlusu said the money to be paid out is available without specifying or elaborating the source.
“We acknowledge that the debts, accumulated for a number of years, have strangled the operations of local councils. We will pay out these arrears so that we can put these institutions into some liquidity for them to operate. But before we pay, we are auditing them. And we are about to finish auditing,” said Mlusu.
In his reaction to the development, Mkandawire said the decision shows that the Capital Hill, especially the Minister of the Finance himself, has keen interest in the affairs of local governments.
However, Mkandawire urged those conducting the audits to expedite and not jeopardize the process so that the councils are bailed out soon.
“The bailout package will help local councils focus on their core mandate of serving the citizens and implementing the public sector reforms that have recently been key elements into the affairs of the councils. We have always said that the finances provided to the local councils have been inadequate to meet the basic financial requirements for the councils to discharge their services,” he said in an interview with Nyasa Times on Friday.
“It is high time the government starts adhering to the Decentralization Policy which demands that five percent of the national annual revenues should be provided to local councils as unconditional grants. If that threshold were being met, councils would not be in the current financial mess,” added Mkandawire.
He also urged the Central Government to consider widening the financial base for local governments, saying the local revenue sources for councils are not adequate to cushion the deficit faced by councils in central government transfers.
The commitment by the Central Government to rescue local councils comes at a time when development partners under the Health Services Joint Fund have just announced that they will stop paying utility bills for district health offices, effective July 1, 2021.
That donor withdrawal, according to Mkandawire, means that local councils would be plunged into more responsibility and debts.Follow and Subscribe Nyasa TV :