Commitee faults debt Fund roll out delay
Budget and Finance Committee of Parliament chairperson Gladys Ganda has faulted the delay to roll out the Debt Retirement Fund amid concerns that it could derail the country’s capacity to restructure and manage public debt.
She said this yesterday in Lilongwe when responding to a presentation made by Ministry of Finance and Economic Affairs officials on the progress of Malawi’s debt management during a meeting with the Parliamentary Cluster Committee on Budget and Finance and Public Accounts.
The Debt Retirement Fund is yet to roll out about three and a half years after it was established and incorporated in the amended Public Finance Management Act of 2021.
According to the Act, the fund is designed to help manage the country’s ballooning debt, which has risen to K13.1 trillion or 84 percent of gross domestic product (GDP) at the end of December 2023.
This is more than 200 percent of the K5.5 trillion recorded at the time the fund was created.
Speaking in an interview on the sidelines of a meeting, Ganda expressed disappointment that it is taking too long to make the fund operational when public debt is soaring.
She said: “It has been about two years since this issue was brought before the Parliament, but we have seen no meaningful progress.
“In the absence of the Debt Retirement Fund, it is difficult for us to provide oversight because we don’t know our capacity to repay the debts we have accumulated.”
Ganda said the committee needs to know how much was borrowed, how much Parliament approved and if it was used for the intended purpose before new loans can be approved.
Her remarks followed a statement from Ted Sitimawina, Principal Secretary for economic affairs in the Ministry of Finance and Economic Affairs, who said the ministry was still exploring ways to finance the fund.
He said: “We have to identify ways of financing the fund. “We are exploring areas on taxation, but we need to be specific on what sectors of the economy we are going to tax and how much we are going to tax.”
Sitimawina said the lack of revenue has weakened the country’s capacity to capitalise the fund.
Last year, the Ministry of Finance and Economic Affairs said it delayed to roll out the fund because it prioritised discussions on debt restructuring, but acknowledged that all legal formalities to set up the fund were complete.
At the time, former minister of Finance Sosten Gwengwe said the government was negotiating with its development partners to provide seed capital for the fund because the government’s fiscal space was too tight
