Finance and Economic Planning Minister Sosten Gwengwe has rescinded the government’s decision to offer K15 billion in bailout packages to local councils for them to clear arrears they owe service providers and workers.
Gwengwe said this in an interview Sunday after the Treasury missed the deadline it gave itself in June last year.
At a meeting held in Lilongwe, former Finance minister Felix Mlusu indicated that the government would disburse the bailout amounts within the 2021-22 financial year while ensuring that councils put in place sustainable resource mobilisation strategies for them to regain their economic momentum.
But as the financial year comes to a close ahead of the new fiscal year which runs from April 1 2022 to March 31 2023, no local council has received the promised money.
“It was wrong for him to say he could give a bailout because bailouts and guarantees are never given by a minister but the Cabinet. So, just give it time [and] I will follow things up and see where we are on those [issues],” Gwengwe said.
Treasury spokesperson Williams Banda said in a separate interview that they were working with relevant authorities to verify debt reports that councils submitted.
“Treasury is working with the National Local Government Finance Committee to ensure that the reports are verified by the National Audit Office (Nao) for appropriate action besides ensuring that resources are mobilised and used efficiently and effectively,” Banda said.
Last year, Banda said they had written councils to submit details of their arrears to be assessed by Nao before action could be taken.
According to Banda, councils were challenged to ensure that social contracts they have with service users are adhered to following revelations that most councils were owed money in unpaid city and ground rates.
While acknowledging that there was a slowdown in activities as they banked on the bailout, Mulanje District Commissioner Stallichi Mwambiwa said they were yet to get an update from the Central Government.
He, however, hailed the Central Government for showing commitment to help local councils perform to the best of their ability.