Malawi Congress Party (MCP) member of Parliament (MP) for Lilongwe Mpenu Nkhoma Collins Kajawa has said the country’s borrowing has reached a critical stage as the country’s debts have gone beyond the fiscal policy.
Currently, the country is reported to have K2.4 trillion debts both locally and externally.
Making his contribution to President Peter Mutharika’s opening speech of the current sitting of Parliament, Kajawa said a lot is being borrowed yet no fruits are seen from the debts, putting citizens at the peril of paying the accumulated arrears generating from the borrowing and also leaving the country operating on a zero budget.
For instance, Kajawa said the country has been borrowing for irrigation and water development, yet there is nothing on the ground to show for it.
“Looking at the financial years, currently government has borrowed up to $2.7 billion. For agriculture alone, we have borrowed $785 towards irrigation, yet we [have not achieved] much in irrigation and water development. Why can’t we come up with mechanisms that will benefit communities?” he said.
Kajawa also said the increasing national debt is affecting the private sector because government borrows a lot from commercial banks where the private sector also borrows which in turn leaves the private sector servicing exorbitant interests.
He, therefore, suggested that the country focuses on borrowing for investment rather than for consumption.
In his response, Minister of Finance, Economic Planning and Development Goodall Gondwe said although there is huge debt the country has not yet reached the threshold of the international standard which is 50 percent of the Gross Domestic Product (GDP).
“When evaluating how much we have borrowed, we do so through the [GDP]. Currently we are at 45 percent and have not yet reached the 50 percent. So we haven’t over borrowed,” he said.
Gondwe, however, said he cannot talk much on the borrowing because it is a long topic. He promised to bring to the House a ministerial statement on the same.
During one of the budget consultation meetings in May this year, Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa warned of continued poverty if the country shuns following responsible debt management.