Just two months after clearing bills owed to suppliers of the Farm Input Subsidy Programme (Fisp), government has yet again accumulated K35 billion (about $47.6million) in arrears, The Nation has learnt.
According to the 22nd 2015/16 Fisp Logistics Report dated February 9 2016, the amount does not include interest incurred because most of the invoices have been outstanding beyond the 30-day period for payment as stipulated in the contracts.
The K35 billion is owed to fertiliser suppliers voucher reconciliations and taxpayers will have to bear the cost of the payment delays through interest charges.
Suppliers are also pressing for payments that have been outstanding for over two years.
Treasury spokesperson Nations Msowoya confirmed the figures, but could not give further details as to when Capital Hill will settle the arrears.
“Government is aware of all its debts and will be settled in due course,” he said.
The logistics report, which comes out weekly, reads: “Government continues to fail to meet its contractual obligations regarding payments, placing a number of companies in peril. Quicker disbursement of funds made available would appear to be required.”
Last December, government paid K11 billion (about $14.9million) to both fertiliser and seed suppliers almost six weeks after the start of 2016 the contract.
This year’s Fisp has been marred with a number of irregularities, including late distribution of fertiliser coupons, uncertainty of seed funding and late fertiliser allocations.
Almost two months ago, six suppliers refused to sign contracts due to disagreements with government on who should bear the foreign exchange losses that come with the depreciating kwacha.
The disagreements followed Minister of Finance, Economic Planning and Development Goodall Gondwe’s announcement that fertiliser suppliers will be paid in local currency despite buying the commodity in foreign currency, explaining that the budget is local unit based.
At the moment, government is also struggling to pay 2014/2015 Fisp arrears amounting to K593 million (about $807 000), excluding interests accumulated over the years.
Government’s struggles to pay Fisp suppliers is just a microcosm of the larger fiscal crisis that has engulfed Capital Hill, which is failing to pay even for the most basic of services in crucial social sectors such as health.
The sporadic public spending is partly being blamed for the slow-down in economic activities in the country although poor weather conditions, a hostile macroeconomic environment and poor public finance management also share the blame.