Budget and Finance Committee Chairperson Gladys Ganda has underscored the need for Parliament to thoroughly scrutinise domestic borrowing.
Ganda was speaking at the weekend during a two-day engagement organised the Malawi Economic Justice Network (Mejn) to build the capacity of the Budget and Finance Committee on the Public Finance Management Act (PFMA) of Malawi and the Sadc Public Finance Management Model Law.
Ganda’s sentiments come at a time Malawi’s public debts is hovering at around K13.1 trillion, more than double the 2024-25 national budget.
According to Ganda, unlike foreign borrowing whose individual loans are brought to Parliament for approval, the same does not happen for domestic borrowing.
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“We do give a blanket approval to the Minister of Finance to borrow on the foreign front. Individual loan authorisation bills are also brought to Parliament for approval. But not the domestic side.
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“So, moving forward, we need to agree with the Minister of Finance on how best we could play our oversight role on the domestic side,” Ganda said.
According to Ganda, failure by Parliament to thoroughly scrutinise domestic borrowing has resulted in a case where Malawi has ended up over borrowing.
She observed that in recent years, the Ministry of Finance has been spending and borrowing more than what was approved at mid-year review.
“What we want to do is tighten those areas to make sure that the government should only borrow what Parliament has approved.
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“If they borrow more than that, there must be a small limit, probably between five to 10 percent but not more than that,” Ganda said.
Mejn Executive Director Bertha Phiri said Malawi reviewed its PFMA in 2022 which brought in some critical functions of the Budget and Finance Committee in as far as its oversight role in debt contraction processes is concerned.
According to Phiri, Section 22 of the revised Act empowers the Budget Committee to inquire into any government financial matter adding that the Act stipulates that the committee shall have full access to government records relating to revenue, expenditure and any other public resources which are relevant to an inquiry.
“Just these two, they are very critical if we are to have fiscal prudence in this country.
“Furthermore, as a regional body, Sadc came up with model law realising the challenges that its member states are facing in public finance management,” Phiri said.
The Mejn boss said the Sadc model law on PFMA is a significant legal instrument aimed at enhancing financial governance and transparency within the Sadc region.
“The model law serves as a benchmark and guiding instrument for national Parliaments to strengthen their domestic legal frameworks related to public financial management.
“It also aims at addressing challenges that most economies within the Sadc region are facing. You will agree with me that despite economic growth in several Sadc countries, there are symptoms of economic market failures, excessive budget deficits, and poor debt servicing,” Phiri said.
The engagement was held with support from the Gates Foundation through Afrodad.
