Fresh push to ban secondhand cars, clothes
Academic, Parliament and civil society organisations have proposed radical solutions to the country’s rising debts which include banning importation of second hand cars and clothes to boost foreign exchange reserves.
Further, they have asked the government to adhere to the ceiling that demands that Treasury should not borrow beyond 10 percent of the previous financial year’s generated revenue.
They said this yesterday at the debts and development conference the civil society led by the Malawi Economic Justice Network (Mejn) has organised to find solutions to the country’s debts currently at K7.9 trillion.
The call to ban importation of second hand vehicles comes on the back of Malawi Revenue Authority’s (MRA) decision to exorbitantly increase excise duty on such cars which was widely viewed as a deterrent.
In his keynote address, Malawi University of Business and Applied Sciences Associate Professor Betchani Tchereni, said the country needs to do away with such imports.
“If the government is spending 72 percent on salaries, that is not going to propel the economy. More so, when those salaries are buying imported commodities. Imported cars and you really call that an investment? Something that is draining forex?
“People are buying second hand clothes. About $28 million per year is going into second hand clothes. That would have put up five factories to be manufacturing high class clothes for Malawians in Malawi, creating thousands of jobs. That was going to be the multiplier effect,” he said.
Government suspended the new MRA excise tax following an outcry led by the civil society. Meanwhile, Tchereni has advised the human rights bodies to stop interfering with enforcement of such measures arguing they are good for the country.
Parliamentary Committee on Budget and Finance member Ralph Jooma said the Ministry of Finance has worsened the debt situation by not adhering to the legal requirements when borrowing.
“We pass the budget with the deficit without considering the amount of that deficit. Section 39 of Reserve Bank Act says that the government can only borrow up to 10 percent of the revenues that they managed to collect in the previous year.
“The law is there, that is a ceiling. But why do they breach that particular law…? If the deficit is K1 trillion we pass, if it’s K2 trillion we pass it,” he said.
The opposition Democratic Progressive Party spokesperson on finance warned that the conduct threatens to worsen the debt situation.
“Whatever we do every year is a mistake that will affect us in the coming years. Our budget this year, instead of creating wealth, is creating problems for tomorrow,” he said in his contribution as a panellist in the discussion on the debt situation.
Meanwhile, Secretary to the Treasury McDonald Mafuta Mwale, in his address, said government has set up a couple of measures to resolve the debts.
“We are negotiating with our commercial and bilateral creditors for debt treatment which includes extending maturities,” he said.
But Mejn board chairperson Martin Mtumbuka insisted the country’s debts, which accounts for 66 percent of the nominal Growth Domestic Product, presents serious challenges to the poor.
The two-day conference will formulate resolutions whose paper will be presented at the African Conference on Debt and Development scheduled for next month in Dakar, Senegal.
