Covid-19, war pushes govt into more borrowing
Parliament has approved Ministry of Finance and Economic Affairs’ three Bills authorising it to secure loans totalling K117 billion aimed at suppressing Covid-19 and the Ukraine-Russia war impact on health and agriculture.
One of the Bills, passed on Friday, is the K29 billion Additional Financing for Malawi Social Support Resilient Livelihoods Project which as part of the package Malawi is getting an additional K164.3 billion grant from the International Development Association.
The funds seek to improve resilience among the vulnerable population through increasing beneficiaries of Public Works Program and extended social cash transfer programme from 105 094 to 147 000.
“The other Bill is for Agriculture Emergency Food Production Facility which is authorising government to borrow K23 billion to enhance food production by providing fertiliser and certified climate smart seeds to smallholder farmers.
The objective of the facility is to enhance food production to mitigate, in the short term, the food shortage occasioned by the Russia-Ukraine war,” reads the Bill in part.
The proposed law further says the funds will support the Ministry of Agriculture to improve its capacity to maintain a reliable database of smallholder farmers registered as farm-input beneficiaries.
“The component will deliver 70 000 tonnes of fertiliser and 2 500 tonnes of climate smart seed will be given to 500 000 smallholder farmers. Each farming household will receive two bags of fertiliser,” reads the Bill.
The august House also passed a third K65 billion loan authorisation bill on Second Additional Financing for Malawi Covid-19 Emergency Response and Health Systems Preparedness Project.
“The objectives of the project are to prevent, detect and respond to the threat posed by Covid-19 in Malawi and strengthen national systems for public health preparedness,” reads the Bill.
Democratic Progressive Party lawmaker Ralph Jooma observed that the Malawi Social Support Resilient Livelihoods Project Bill was tabled late in the House.
He argued social cash transfer arrangement will be impacted by the 25 percent Kwacha devaluation which has led to increase in prices of essential commodities.
The loans Bills come as President Lazarus Chakwera’s administration says dealing with the public debt crisis is now a priority.
In an earlier interview, Catholic University economics lecturer Hopkins Kabaghe warned that public debts currently at over K2.6 trillion would result in worse economic suffering.
