The World Bank has described the Malawi government bankrolled subsidies as inefficiencies that are worsening the economic situation.
However, the bank’s Malawi Economic Monitor, a by-annual newsletter has not said whether the government should abolish the subsidies or not.
The World Bank statement came as opposition parliamentarians in the National Assembly on Tuesday called on the government to discontinue the malata and cement subsidies programme and relocate the resources to the collapsing public education sector.
Donors and local experts are also increasingly putting pressure on the Peter Mutharika administration to find an exit strategy for the popular farm input programme but has been rocked with problems due to the prevailing economic climate.
The newsletter, entitled ‘adjusting in turbulent times,’ accuses the government of excessive borrowing, saying the government has borrowed four times the amount agreed in the national budget and asked the government to adjust massively if the current economic situation is to be reversed.
“Policy makers should tighten expenditure and adhere to budget ceilings,” says the World Bank newsletter in part.
The Bretton Woods institution also laments huge wage bill in government.
Finance minister Goodall Gondwe at an economic symposium on Tuesday in Lilongwe organised by the Reserve Bank of Malawi, however said the government has drastically cut on borrowing through treasury bills, saying infact, the government had not borrowed.
Gondwe was upbeat Malawi would be back on track on extended credit facility come February, a move that will bring back donors.
But economics professor at Chancellor College Ben Kalua said economic fundamentals clear show the government is over borrowing saying it is now issuing two year bonds.