Pirates of the capital

Secretary to the Treasury Ronald Mangani was unequivocal during a Finance and Budget Cluster meeting when members of Parliament (MPs) pushed him to authorise processing of general purpose fund (GPF), a loan facility that legislators have traditionally accessed and currently stands at K5 million.

Mangani made it clear that government—which at the time was already in arrears of K2 billion with commercial banks for legislators’ personal vehicle loans of K24 million each—could not afford to shoulder the huge subsidies for another facility in the form of GPF.

Now, here are some painful facts about the loans to MPs. First, they are contracted from commercial banks with government acting as guarantor—meaning that, at least technically, it is Capital Hill that actually borrows the money, hence, it adds to the national debt stock.

Second, the legislators get a 90 percent interest subsidy, which the taxpayer foots and another 50 percent subsidy on the principal amount.

In other words, of the K24 million car loans, K12 million is a freebie and MPs are only deducted the other half over the five-year period.

And of the interest rate—currently hovering above 45 percent—legislators only pay 10 percent of that with the remaining 90 percent being shouldered by taxpayers, who have to struggle on their own to pay the exorbitant interest rates if they have to get a personal loan from the bank.

I am not sure about the mathematics of the GPF facility, but I know that it too is heavily subsidised.

Thus, when Mangani told MPs that they will have to forego GPF, the legislators subtly sent him a message to his boss—Finance, Economic Planning and Development Minister Goodall Gondwe—that they; like the pirates off the coast of Somalia, will attack the budget and hold it for ransom so that its owners, the taxpayer, give them GPF.

To compromise, Gondwe tried to reason that parliamentarians could get the loans guaranteed by government, but would have to pay interest rates at market rates on their own.

No, bellowed MPs—it had to be a full package of subsidies or the budget would not meet President Peter Mutharika’s assenting pen.

Gondwe buckled and granted them their wish that increased the domestic debt stock by around K1 billion and widened the budget deficit by millions in loan subsidies.

No one says these MPs are not entitled to these loans, but given how voters are suffering out there on the back of food shortages, high cost of living, lack of drugs in public hospitals, unsafe potable water and the endless shortages of teaching and learning materials, moral conscious should have compelled the legislators to pause and spare a thought for those folks.

Moreover government cannot recruit more medical personal and teachers simply because there isn’t money for that. There have been pay freezes across most of the public sector to try and keep the budget within the resource envelop.

But, like the pirates off the coast of Somalia who cost global trade an estimated $7 billion a year as at 2011, our MPs can’t care less about the harm they are causing to public finances and the very poor people who put them in the office they now abuse for personal aggrandisement.

Human rights campaigner Justin Dzonzi puts it in this way:

Said Dzonzi: “If the conditions of service say they are entitled to this and that, then they would be entitled to raise that issue with the employer to honour them following those conditions because they are in the conditions of service that apply to them.

“But when you put into the equation the fact that the MPs, in essence, represent the people of Malawi, the Constitution in Section 12, requires that they exercise their powers for the benefit of Malawians, then you begin to realise that they cannot insist on their conditions of service, if by insisting on them, they are not going to represent the best interests of Malawians.”

Now with Gondwe showing weakness on GPF, MPs smelled more blood and figured that they could snatch more from Capital Hill—this time, something to help them in their re-election bids as 2019 approaches. They demanded that Gondwe more than double the Constituency Development Fund (CDF) from K12 million to K25 million.

That would have pushed the CDF budget from roughly K2.3 billion in the previous financial year to around K4.8 billion for all the 193 constituencies in the new fiscal calendar.

When Gondwe said such a demand is not fiscally feasible, the pirates of the capital snatched the ship that is the national budget—holding to ransom the hopes and dreams of 16 million mostly poor Malawians—until they got their CDF hike to levels closer to their demands.

In fact, they rejected a K51 billion allocation to the National Local Government Finance Committee (NLGFC), which carries the CDF budget line and finances for community projects and service delivery nationwide.

After haggling, MPs forced out K18 million per constituency from Gondwe, bringing the bill to around K3.5 billion; thereby adding K1.2 billion to the deficit.

Of course, MPs feel embodied because they see their political colleagues in the Executive as living large in the face of a fiscal crisis—buying new luxury vehicles and enjoying huge travel budgets.

So, they ask, why should they sacrifice when those who should lead by example are free-wheeling?

My answer is simple: that is why MPs occupy their seats: to check those Executive excesses. Instead, legislators let these excesses pass as a bargaining chip for their own selfish interests.

The whole capital is full of pirates and I am glad they have left town!