Finance Minister Felix Mlusu Thursday said the government would bail out debt-ridden councils after verifying the authenticity of debt.
Mlusu was responding to a question from Machinga East lawmaker Esther Jolobala, who wanted to know if the Treasury planned to rescue local councils that were failing to repair assets, including ambulances.
The legislator said most local councils were struggling to provide quality services to Malawians because of debt.
Currently, local councils are swimming in debt hovering around K14 billion.
Reacting to the 2021/22 National Budget, Malawi Local Government Association acting Executive Director Hadrod Mkandawire recently bemoaned the absence of bailout packages for local councils.
“It is regrettable that our plea for a bailout package has been overlooked. The bailout package could have gone a long way in transforming Local Government institutions as regards how they serve citizens and contribute to Malawi’s 2063, MGDS [Malawi Growth and Development Strategy] III and Sustainable Development Goals.
“However, as at now, I am afraid the much-touted public sector reforms in Local Government will become another talk-show as, instead of focusing on the turnaround strategies, local governments will continue to concentrate on survival strategies which include paying long outstanding debts,” Mkandawire said.
But speaking in Parliament Thursday, Mlusu said the government appreciated the financial burden that councils were sailing through and was committed to bailing them out after auditing them.
“The money to bail them out is there but what we want is to have an audit of the councils so that we establish the root cause of the debts.
“We are auditing the councils and, once that is satisfied, we will bail them out,” Mlusu said.