Firms want over K1.8 trillion Covid-19 bailout
Government is said to be overwhelmed with bailout demands from the private sector which are exceeding the size of the national budget, the Presidential Task Force on Covid-19 has revealed.
With the 2019/20 national budget pegged at a revised K1.84 trillion, demands above the national budget mean that the distressed companies are looking for funds above K1.8 trillion.
Presidential Task Force member, Prince Kapondamgaga, who was accompanied by the task force’s Co-Chairperson, Dr John Phuka, government spokesperson, Mark Botomani, and another member of the task force, Luther Mambala, said on Thursday that Treasury is still juggling the figures.
Kapondamgaga, who is also Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president, said Minister of Finance Joseph Mwanamvekha, who co-chairs the task force, told the committee that Treasury had received many submissions from businesses in Malawi looking for bailouts.
“He said he was scrutinising them. What is of concern is that the minister told the task force that the demands are exceeding the size of the national budget. So when scrutinising that issue, the committee will sit down to analyse the situation on what could happen.
“In addition we will look at the availability of resources because honestly speaking with Covid-19, most of the business activities have come to a halt. For example, the minister indicated that customs has been heavily affected as there are no goods coming into the country,” Kapondamgaga said.
The private sector demands come barely a few days before the start of the budget meeting of Parliament.
Among the applicants for bailouts are private schools which are demanding K1.9 billion from the government for every month the schools remain closed.
As of last month, Independent Schools Association of Malawi president, Joseph Patel, said the bailout demand from the country’s over 1,400 primary and secondary schools had risen to K5.7 billion.
Briefing reporters in Lilongwe recently, Malawi Congress of Trade Unions Secretary-General, Dennis Kalekeni, warned that if bailouts are not given to distressed firms, chances are that there would be 100 percent job losses in the private sector within one year of Covid-19.
In its April 2020 Economic Report, MCCCI says it expects tourism, one of the priority growth sectors in Malawi, to be greatly affected since it depends largely on the movement of people.
MCCCI says local hotels are already witnessing massive cancellations of bookings due to travel restrictions as well as health safety considerations.