International Monetary Fund (IMF) has advised fiscal authorities to strengthen public investment management through rigorous prioritisation of projects and improved project management framework.
In its Country Report for Malawi issued last week, IMF noted that Malawi has an ambitious plan for infrastructure projects that seeks to support sustainable growth and poverty reduction.
But the Bretton Wood institution has cautioned that in implementing these projects, it will be important to ensure that financing preserves debt sustainability and contains fiscal risks.
IMF said strengthening public investment management as well as oversight and monitoring of State-owned enterprises and other parastatals will be critical to achieving this goal.
Currently, Malawi is said to have a weak public investment management, especially in parastatals, which hinders economic development, according to a latest African Development Bank (AfDB) report.
For instance, out of 21 parastatals analysed in the Malawi Government 2018 Annual Economic Report, nine, representing 43 percent, had debt equity.
Further, the financial position of four of the six major utility companies— water boards and Electricity Supply Corporation of Malawi (Escom) was subdued.
As at December 2017, according to the report, Escom had debt equity ratio of 298 percent which prompted it to seek a K50 billion bailout package from Treasury which was rejected.
Similarly, Blantyre Water Board, Central Region Water Board and Northern Region Water Board had debt ratios of 106 percent, 177 percent and 151 percent, respectively.
While admitting that prastatals are not efficient, Minister of Finance, Economic Planning and Development Goodall Gondwe, said in an interview, Treasury will closely look at the statements made by the IMF and improve on the weak points.
“We will examine ourselves and see how best we can resurrect the institutions that are often troubled such as Escom and Admarc [Agricultural Development and Marketing Corporation],” he said.
On his part, corporate and financial strategist James Kamwachale Khomba, who is also a lecturer at The Polytechnic, a constituent college of the University of Malawi, said in an interview on Monday that until Malawi improves on its governance structure, parastatals will not make social economic strides in terms of corporate performance.
“Malawi seems to have problems with separating political issues and government issues. We seem to still have the one party system hangover whereby there is no separation between politics and government,” he said.
Economic commentator Alick Nyasulu called for strengthening of parastatals governance structure.