Treasury has said it is yet to start disbursing the K13.35 billion raised through the long-term development bond towards implementation of development projects, a month after it was generated.
Last month, the government issued a 10-year infrastructure bond raising the K13.35 billion at a face value of K18.45 billion.
The money is meant to fund the Balaka Market- Nkhotakota-Nkhata Bay Road (M5), Ntcheu- Tsangano-Neno-Mwanza Road, construction of the aquatic complex at Kamuzu Institute for Sports, Jenda- Edingeni-Engalaweni – Manyamula Road and the Dzaleka-Ntchisi-Mpalo-Malomo Road.
In an interview on Wednesday, Ministry of Finance spokesperson Williams Banda said the government departments and agencies that will be allowed to draw the funds for the intended projects were yet to draw any amount.
“We will be releasing the money upon request from the MDA’s according to their cash flows and that is the more reason we are saying we will be issuing these bonds quarterly. These are ring, fenced fees and they will be released solely for these projects,” Banda said.
Economics Association of Malawi Executive Director Frank Chikuta said ring-fencing the funds was a good way of ensuring that they are used only for the intended purpose.
“If the funds are kept idle for too long, then interest will be accumulating, while if the government waits until the last minute to raise the funds, it may fail to do so due to tight liquidity conditions in the market and hence accumulate arrears with contractors.
“These challenges can be mitigated by good planning to ensure that the gap between the time of raising and using the funds is minimised and also lending the idle funds on a short term basis in the financial markets,” Chikuta said.
University of Malawi Economics Professor Ben Kalua said the funds lying idle means that infrastructure is not being taken care of, which creates a problem.