- Committee says projects merely an election gimmick
The parliamentary Budget and Finance Committee fears government is biting off more than it can chew with the long list of infrastructure projects it plans to embark on between now and 2018, most of which the committee suspects would be a public debt bargain.
The committee’s chairperson, Lilongwe City South West Member of Parliament (MP) Rhino Chiphiko (Malawi Congress Party-MCP), was speaking in an interview after Minister of Transport and Public Works Jappie Mhango presented a ministerial statement updating the House on infrastructure projects.
The list of projects included several road projects that have stalled for many years but are being revived, including Lumbadzi-Dowa-Chezi and Zomba-Jali-Phalombe-Chitakale roads, as well as five upcoming projects.
Chiphiko said the government has not been forthcoming in disclosing sources of funding for the projects, fearing that the government could be building up more arrears by contracting for the projects through promissory notes.
He said: “The continuous contraction of public debts to finance projects will be disastrous in the long run. We are concerned that this is merely an election gimmick that will not be fulfilled due to delays in disbursements of funds at the expense of equally important projects in health and education.”
While the funders of the road projects in progress were disclosed in the statement, the five upcoming projects did not have such information.
These included the Ntcheu-Tsangano-Neno Road, upgrading of Lirangwe-Chingale-Machinga Road, Blantyre Bypass Ring Road, upgrading of Kawere-Mkanda Road and upgrading of Rumphi to Hewe Turn-Off Road.
In these projects, Mhango reported that works had either already started, were due to start or the site was due to be handed over to a contractor.
Such lack of detailed information caused Chiphiko to wonder if the projects were just another pipedream.
“These projects are just unrealistic and are really an elections move. What we are concerned about is that the government has started rebuilding arrears because these projects are being funded through promissory notes,” he said.
Chiphiko gave an example of the Lilongwe Old Airport-Kasiya-Santhe Road scheduled to be completed by January 2019, whose progress is at 60 percent but the committee found out that the contractor was not being paid.
He said the government should forget about decreasing public debts when road infrastructure projects are paid for through promissory notes which are rarely honoured.
According to the 2017/18 draft financial statement, as at December 2016, total public debt amounted to K2 trillion, accounting for 53.5 percent of the Gross Domestic Product (GDP), of which $1.7896 was foreign debt and k806.2 billion, or 20.7 percent of GDP, was domestic debt.
International Monetary Fund (IMF) resident representative Jack Ree told The Nation last month that a rapid increase in debt is not good as about 15 percent of the government budget is used for interest payment alone.
Meanwhile, the committee said it plans to conduct an analysis of the status of donor-funded projects as well as implications on loan repayments and the macro-economy in the long-term.
In an interview, Mhango insisted that funds had been made available for the roads either through donors or government.
He mentioned the Zomba-Jali Road, whose construction resumed recently with funding from Arab donors, and the Lumbadzi-Dowa-Chezi Road which has been allocated K1.2 billion in the budget.
According to the draft financial statement for 2017/18, the government has taken on funding for several roads, among them Njakwa-Livingstonia Road, the dual carriageway from Parliament Building to Bingu National Stadium and completion of Jenda-Edingeni Road, among others.
About K5 billion was allocated to the Lilongwe Old Airport-Kasiya-Santhe Road and K4 billion to Ntcheu-Tsangano-Neno Road, according to the budget.
The 2017 Construction Transparency Initiative assurance report found that long after some roads projects were initiated with funding from loans, the cost had doubled or tripled due to delays in construction.
The report noted that cost-overruns and delayed funding to locally resourced projects were the major factors affecting the construction industry.