Chithyola optimistic of debt sustainability

Minister of Finance and Economic Affairs Simplex Chithyola-Banda says government is committed to restoring public debt sustainability by, among other things, negotiating with creditors for debt restructuring.

In his statement on Friday as he wound up his response to legislators’ comments on the 2023-2024 Mid-Term Budget Review Statement he delivered on November 20 2023, Chithyola-Banda pointed out that there is need to invest in productive programmes that will enable the country to enhance its capacity to repay its debt in few years to come.

He said the focus is to ensure that foreign financing is largely through grants while borrowing is on concessional terms and contracted for projects with higher prospects on returns.

He said: “On the domestic market, the House may recall that we are implementing the local currency infrastructure bond programme that ring fences the loan proceeds for specific flagship projects.

“Overall, government is in an overdrive to achieve fiscal adjustment by enhancing domestic revenue mobilisation and expenditure re-prioritisation.”

The minister also informed the House that government is geared to implement long sustainable strategies to build foreign exchange reserves, adding that a number of measures are being considered to rebuild a resilient economy.

He said the strategy which his ministry advanced and adopted is actually central to the country’s achievement of a sustainable buildup of foreign exchange reserves.

On recommendation that government should ensure a reasonable balance between borrowing and funding cuts, Chithyola-Banda indicated that his ministry will ensure that grants disbursements are properly timed on the cash-flow table to avoid spending in anticipation.

Responding to sentiments by Thyolo Central legislator Ben Phiri, who underrated the impact of achieving the Extended Credit Facility (ECF) to the economy, Chithyola-Banda observed that as much as ECF unlocks donations, its impact is far reaching in as far as private sector investment is concerned.

In his contribution earlier, Blantyre North MP Francis Phiso expressed concern with government position to continue moving government offices from Blantyre to the capital, Lilongwe, arguing that the arrangement will only end up killing the commercial city as was the case with the old capital, Zomba.

But legislator for Ntchisi South Ulemu Chilapondwa pointed out that the arrangement is not the making of the current administration, rather it was former president Bingu wa Mutharika’s directive.