Economists caution on continued borrowing
Economists have urged government to tread carefully on its continued external borrowing, saying there is need to ensure borrowing for investment does not increase the country’s debt burden.
The economists were reacting to plans by the Malawi Government to borrow $57.7 million (about K57.9 billion) from the International Fund for Agriculture Development (Ifad) at a time debt is currently at K7.9 trillion or 75.7 percent of the gross domestic product.
In an interview on Tuesday, Malawi University of Business and Applied Sciences associate professor of economics Bethani Tchereni said the continued borrowing will push up the country’s debt, but stressed that it is “worthwhile borrowing because the government is borrowing for investment”.
He said: “Investing to improve people’s livelihoods is a worthwhile investment.
“When people’s capacity to generate income improves, the country’s economic performance goes up with it. Even the government’s capacity to generate revenue through taxes improves.”
In an earlier interview, economist Bond Mtembezeka urged government to “tame borrowing and strengthen the resource envelope by, among other things, implementing effective tax policies and widening the tax base”.
According to money bills, the government, through the Ministry of Finance and Economic Affairs, will borrow $27.7 million to provide additional financing for the Programme for Rural Development which seeks to increase the income and improve the nutrition of smallholder farmer households.
Parliament will also deliberate on another bill to borrow $30 million to provide additional financing for the Financial Access for Rural Markets, Smallholders and Enterprise Programme.
