Opposition Malawi Congress Party (MCP) has described the K45.2 billion bailout of Agriculture Development and Marketing Corporation (Admarc) as an illegal spending because the government did not seek authority from Parliament.
MCP spokesperson on finance Alexander Kusamba Dzonzi said this yesterday when he reacted to the Mid-year Budget Statement Minister of Finance, Economic Planning and Development Goodall Gondwe delivered in Parliament on Friday.
He said while Section 63 (1) of the Public Finance Management Act (PFMA) empowers the minister to guarantee loans of statutory bodies, the law was specific that this should be in the interest of the public and necessary.
Kusamba Dzonzi said there was no proof that the minister had sought prior approval from the Cabinet before agreeing to the guarantee.
“It is possible the bailout was approved by the Cabinet, but it was not approved by Parliament. One wonders, are these actions legally binding? I do not believe this guarantee was done in good faith,” he said.
Quoting Section 12 (4) of the PFMA, Kusamba Dzonzi also faulted the minister for not disclosing to Parliament the “special circumstances” which could have necessitated the bailout even after some MPs raised the issue during the last Parliament meeting.
Gondwe told the House that government guaranteed Admarc’s loans in 2015/16 financial year due to the perceived maize shortage in the country at that time, but the maize was not sold due to donations which were distributed for free.
Of the K45.2 billion bailout, K29.5 billion was repaid to CDHIB, K9.7 billion to Ecobank, K4.5 billion to FDH Bank and K4.7 billion to Capital Alliance.
Admarc repaid the banks about K3.4 billion of its own resources and is expected to pay back to the government once the 90 000 metric tonnes in its stock is sold this financial year. n