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$500 million loans, grants to ease forex woes— Minister

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Werani Chilenga

Minister of Finance Sosten Gwengwe Wednesday said the country is expected to raise $500 million (approximately K513 billion) through loans and grants that government will get from different partners for various projects.

Gwengwe told Parliament that the funds, half of which are in the form of grants, will also help in easing forex challenges in the country.

The lawmakers have so far passed a $60 million (K62 billion) money bill for the rehabilitation of Kapichira Hydropower Dam and financing transmission and distribution infrastructure damaged by Tropical Storm Ana in January this year.

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Gwengwe said K25 billion of the amount is a grant while K37 billion is a loan, from the World Bank under its International Development Association Crisis Response Window.

“Kapichira was one of the worst hit infrastructures by the tropical storm. The damage took 129.6 megawatts of electricity out of the national grid as the plant was rendered out of operation,” the minister said.

He said Electricity Generation Company is waiting for a ‘no objection’ from the Public Procurement and Disposal of Assets Authority before the actual maintenance can begin after all the preparatory works were already completed.

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Democratic Progressive Party lawmaker Werani Chilenga, who spoke on the bill on behalf of his party, called on government to find immediate means of filling 208-megawatt gap created by the Kapichira disaster and the termination of a contract with Aggreko.

United Democratic Front spokesperson on the bill, Esther Jolobala, urged government to explore other power generation alternatives including use of coal.

Parliament is expected to deliberate more money bills such as Agriculture Emergency Food Production Facility; Second Additional Financing for Malawi Covid Emergency Response and Health Systems Preparedness Project; and Additional Financing for Malawi Social Support for Resilient Livelihoods Projects.

Other loan authorisation bills include one for Additional Financing for Eastern and Southern African Higher Education Africa Centre of Excellence Project and another for the Shire Valley Transformation Programme Phase 2

Malawi has been facing a forex squeeze in recent times, a development that has threatened the importation of strategic commodities such as fertiliser.

On the other hand, some economists have been warning that banking on loans for foreign currencies is not sustainable.

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