By Wezzie Gausi:
The Ministry of Finance and Economic Affairs engaged the country’s top financial institutions in Blantyre to appeal for resources aimed at paying arrears and help fund the 2024/25 national budget gap.
However, Secretary to Treasury Betchani Tchereni was quick to say that he was not at liberty to reveal figures that government is looking for and the amount of arrears to be paid.
But he said the arrears in question that are to be paid are those that have been accumulated in the 2023/24 financial year.
“I can confirm that yes indeed the meetings did take place in Blantyre and all the major financial institutions were represented. The meetings revealed that there are several misinformation that are spread leading to certain behaviors of financial institutions such as holding their money balances in anticipation for speculative risks.
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“As government, we always rely on partners and other financial institutions to help us when needs arise. This process happens now and again, and it is worth noting that there is a good relationship between financial institutions and the government,” Tchereni said.
He added that the government also understands the worries that are there regarding debt restructuring.
“But we are here to assure the financial institutions that the debt that is going to be restructured are not domestic, so there is no need for panic,” Tchereni said.
The ST also indicated that the meetings ironed out all the negative news that have been leading to low uptake of government securities.
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Centre for Social Accountability and Transparency (CSAT) Executive Director Willy Kambwandira said it was that the government keeps on borrowing to fund the budget and pay arrears.
“We cannot keep on borrowing for consumption and then hear of resources plunder afterwards. And these financial institutions will lend to government at interest so in essence the burden on government will grow,” Kambwandira said.
Minister of Finance is expected to present the 2024/25 budget on February 23.
In 2023/24 financial year, budget deficit was projected at K1,234.39 billion (8.1 per cent of GDP). The deficit was to be financed by net foreign borrowing amounting to K131. 46 billion (earmarked for projects) and net domestic borrowing amounting to K1,102.93 billion.
When presenting the midyear budget review, Finance Minister Simplex Chithyola Banda said the 2023-24 national budget has seen the financial plan rising by about K540 billion from the initial K3.79 trillion presented in February to K4.33 trillion.
Presenting the statement to Parliament, Chithyola Banda attributed the jump in the overall expenditure to compensation of government employees, social benefits, public debt interest, other expenses and the use of goods and services.
Of course, Chithyola Banda has largely benefitted from the resumption of budget support which will see an immediate injection of $240 million (about K408 billion) from the World Bank, African Development Bank and the European Union (EU), among others, as they have come back after the International Monetary Fund (IMF) granted Malawi an Extended Credit Facility (ECF) Programme.
