Govt warned on ballooning external debt
Blantyre-based investment management advisory firm Alliance Capital Limited has warned against the use of debt for purposes which will not generate returns, but for fixed costs of running government, arguing that the development would render Malawi very vulnerable.
Specifically, the firm observes that high debt causes limited room to implement domestic solutions to the problems facing Malawi because the debt is repaid on the conditions of the lenders.
Recently, government confirmed that debt profile has hit K2.1 trillion, a development which experts describe as worrisome.
But speaking to State-funded Malawi Broadcasting Corporation (MBC) on Wednesday, Minister of Finance and Economic Planning, Goodall Gondwe, said government is doing all it can to reduce borrowing and also looking for ways to borrow for investment.
However, the firm says government strives to reduce operational costs of running some of its ministries by reducing some staff allowances. It also tipped government to fight corruption and strengthen financial management.
The report reads in part: “In order not to swallow up too much funds, government needs to reduce running costs by providing incentives upon performance only. This can reduce the budgeted funds to specific ministries and enhance productivity.”
The asset managers have advised government to invest in industrialisation, observing that Malawi often borrows a lot because it is not industrialising fast enough to create enough products for its need to export.
