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Sosten Gwengwe tells councils: Government not keen on bailouts

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Malawi Local Government Association (Malga) has again sent a request to the government for a bailout to local councils, which have arrears in excess of K16 billion but the government is skeptical.

Making a presentation during the last lap of pre-budget consultations in Mzuzu on Friday, Richard Chakhala, vice chairperson of Malga Finance Managers Network, said almost all councils in the country are financially squeezed to generate revenue with which to improve public service delivery.

According to Chakhala, the financial woes have worsened because of Capital Hill’s failure to honour the transfer of five percent of total revenue to the councils as required by the Decentralisation Policy.

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The policy instructs central government to transfer five percent of Net National Revenues (NNR) as General Resource Fund (GRF) or Unconditional Grants to councils.

“The issue of bailout, I know sometimes sounds crazy but it’s critical in the sense that these arrears that councils have, have been there for a long time or have been accumulating for overtime. You know we have had many administrations but how things are managed differ between administrations.

“We have had times where we could get instructions to assist on an event happening in our area. You talk of visits and ferrying people. All these activities are not budgeted for in the local councils.

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“As a result we have issues of misallocations, overspending and what have you. That is why the government has to come in because these are activities that the central government was supposed to fund in the first place,” he said.

But speaking in an interview, Minister of Finance and Economic Affairs, Sosten Gwengwe, said the government is not always keen to provide bailouts.

Gwengwe suggested that there should be a discussion between Malawi Revenue Authority and the local councils on how better they can collect more revenue.

“MRA and local councils need to sit down and see because if they are able to collect what they are owed then there is no bail out needed because they are owed billions. What can we do as government at central level to help them to collect what is owed to them? That is a discussion we are proposing, that we sit down and help them out because bailout is easier to say. It still is taxpayers.

“And we are not too keen to always flush out bailouts because we do not have the money. The money is for taxpayers and the little we get we have to use in a manner that is prudent,” he said.

Other propositions that came out during the meeting included a call to increase the drug budget for councils from 10 percent to 40 percent.

In the 2022-23 budget, Ministry of Health issued a waiver to councils to enable procurement of essential drugs from any drug store using an additional 10 percent fund which the government has provided to every council, while awaiting supplies from Central Medical Stores Trust.

Other issues that came up were consideration of tax holidays for Malawian companies and a review of Affordable Input Programme.

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