British High Commissioner Michael Nevin has urged the Malawi to ensure that those who obtained loans from the State-owned commercial bank, Malawi Savings Bank (MSB) should be accountable and that government should not pay loans on their behalf.
The proposed sale of MSB has attracted controversy amid reports that politically connected businesspersons and politicians obtained billions in loans from the bank which government intends to wipe off through promissory notes.
The civil society has also protested the move while some concerned citizens and activists have attempted to block the sale in court.
In published interview, Nevin said the ‘toxic’ loans should be dealt with as part of that process to make the bank viable, but should be done in a transparent manner with no elements of favouritism so that taxpayers should not lose out.
“The issue of toxic debts has to be dealt with as part of that process to make the bank viable, but it has to be done in a transparent manner with no elements of favouritism so that taxpayers should not lose out,” Nevin is quoted by The Nation.
“Any claim against government if they are offsetting loans needs to be verified as genuine,” he said.
In a statement released at weekend, government admitted creating the situation that has put MSB in this predicament, saying it used the bank to offer loans and payments, which ended up compromising the professionalism of the bank’s management.
The statement further said it was government’s strong view that the bad portfolio management practices imposed on the bank’s management would arise regardless of the political party in power
“In particular, each party would exploit the opportunity to abuse the bank on account that it is wholly-owned by the government,” reads the statement in part.
Government said in the statement that political interference in State-owned enterprises is a “worldwide reality”, which supports the argument for privatisation and divestiture, as advanced by the IMF and World Bank.