Delegates to the two-day National Debt Conference in Lilongwe last week asked government to stop the tendency to borrow commercially as such loans have high interest rates.
In a communiqué read out at the end of the conference on Thursday, the delegates said besides the high interest rates, some of the commercial loans also have terms that can lead to unsustainable debt burdens over time, thereby jeopardising the country’s long-term financial stability and development prospects.
The delegates also called on the Executive arm of government to address the indiscriminate granting of tax waivers to companies, saying this negatively impacts on revenue generation.
Reads the communiqué in part: “A comprehensive review of taxation policies and systems is essential to ensure equity, fairness, and compliance for businesses and individuals.”
During the conference, the Executive was also asked to exercise fiscal discipline by avoiding borrowing for consumption purposes and instead focus on investments that promote sustainable economic growth, infrastructure development, and human capital enhancement.
The communiqué also stressed the need to introduce Bills in Parliament that encourage production aligned with available resources.
Additionally, the government has been asked to set interest rates rather than relying solely on market forces.
This move aims to stabilise the economy, protect consumers from volatile market conditions, and align interest rates with national economic goals.
In his address, Ministry of Finance and Economic Affairs Revenue Policy Division chief economist Wazi Ligomeka observed that Malawi has untapped revenue potential in its value-added tax (VAT) system.
However, he was quick to add that realising this potential requires targeted improvements in the administration of VAT.
Said Ligomeka : “Currently, only 14 percent of VAT is being collected, a figure that is significantly lower than some Sub-Saharan countries that collect as much as 32 percent.”
Turning to Parliament, the delegates asked legislators to enforce the 28-day threshold for introducing financial Bills to ensure timely consideration of financial matters and promotion of fiscal discipline.
They also called for the establishment of a budget office within Parliament that should enhance the institution’s capaci ty to analyse and evaluate debt-related issues before approval.
Meanwhile, presidential adviser on non-governmental organisations (NGOs) Martha Kwataine has called on civil society organisations (CSOs) to invest in data research so as to be armed with factual evidence to effectively engage with the government on critical issues.
In her closing remarks during the conference, she encouraged CSOs to collaborate with the academia and research institutions to access readily available data which she said is crucial for informed advocacy.
T h e c o n f e r e n c e a l s o highlighted the importance of women’s perspectives and experiences in addressing the current debt crisis.
“Strategies for debt relief, economic recovery, and sustainable development must be equitable and inclusive. Women’s active participation is essential for effective interventions,” reads the document.
The conference, which was organised by Malawi Economic Justice Network (Mejn) with funding from the African Forum and Network on Debt and Development, sought to provide a platform for an honest discussion on the effects of unsustainable debt on social sector investments, which is affecting quality service delivery.
