Govt withholds loans to MPs

Treasury has put its foot down and penned Speaker of the National Assembly that government cannot extend more loans to Members of Parliament because it is currently yet to clear over K2 billion arrears with the commercial banks for MPs’ personal vehicle loans.

But the development has not gone down well with some legislators who took to task Treasury Secretary Ronald Mangani during a Finance and Budget Cluster meeting on Tuesday as the MPs took turns seeking assurance from government when it would start processing the General Purpose Fund (GPF) .

The members who spoke on the matter during the meeting included Member of Parliament for Lilongwe Mpenu Makala Ngozo and MP for Kasungu North Beatrice Mwale who urged the ST to sort out the GPF warning him that if there is no solution to the issue, the Speaker and government will find it tough when the budget meeting resumes next week. The MPs said they wanted an assurance from Treasury that it is doing something for members to get the GPF. Makala Ngozo and Mwale also wondered why Treasury says it has no money to clear the bank loan arrears to enable them to get the GPF when the same government has promised to give out loans to ward councillors who have no terms of conditions.

Government has promised to give councillors loans to buy motorcycles worth up to K5 million each to improve their mobility.

On his part, Mzimba East legislator Christopher Mnyenyenbe told the Cluster meeting that it was unfair for the MPs to be denied the GPF.

A letter Treasury Secretary (ST) Ronald Mangani has written to the Speaker dated May 17 which Weekend Nation has seen says he is aware of the MPs’ concerns but it has been difficult for Treasury to negotiate more loans like the GPF for the members with the current arrears of K2 billion from car loans it is servicing.

Treasury has so far put its foot down saying government has no money to clear the personal vehicle loan arrears which include principal and interest with the commercial banks for them to extend new loans to MPs.

Mangani, who on Tuesday this week led a delegation from Treasury that met the Finance and Budget Committee of Parliament Cluster said that government cannot go back to the same banks it has arrears with to extend the GPF loans.

Since the opening of Parliament last month, MPs from both sides have been posturing to make Treasury give them the General Purpose Fund (GPF) loans of K5 million each which they are supposed to repay between now and 2019. If all the 193 MPs get the GPF the total bill comes to K1.4 billion at the 40 percent rate the banks are charging.

The loans are obtained from commercial banks with government acting as collateral. The legislators get a 90 percent interest subsidy which the taxpayer foots and another 50 percent subsidy on the principal amount.

This means that at the prevailing 40 percent bank rate the MPs are only paying 4 percent interest atop the K12 million loans spread across the repayment period. The loans were obtained in July 2014.

The GPF is in addition to the K24 million personal car loans which the MPs got when they were elected to Parliament in 2014. Previous members were receiving K5 million as personal motor vehicle loans.

Apart from pocketing a one-off K12 million subsidy in the K24 million personal motor vehicle loans from banks, the taxpayer also foots 90 percent of interest on their motor vehicle loans.

MPs who determine their own perks, subject to the President’s approval, receive a consolidated salary of K1.4 million and an emergency loan of K1 million. They also get a consolidated allowance of K1.1 million a month for housing, constituency, utility and motor vehicle maintenance.

But the MPs say the loan facility is part of their privileges in their conditions of service.

The pressure on government for GPF comes as MPs have now started feeling the heat as they are repaying car loans which they obtained after being elected in May 2014. Each MP is entitled to a car loan of K24 million per tenure of office for two duty free vehicles of any type.

Dzoole Mwale confirmed to have received a communication from Treasury informing the MPs of government’s stand.

Said Dzoole Mwale: “I can confirm the Commission has received the communication from Treasury over the General Purpose Fund, that as of now they are not able to provide the facility because government has huge arrears with the banks’’.

But Dzoole Mwale said the facility is part of conditions of service for Members of Parliament and time is running out for them to get the loans as they are supposed to repay them within the next 36 months before their tenure comes to an end in May 2019.

In a related development, the Malawi Revenue Authority (MRA) on April 20 wrote the Speaker of the National Assembly expressing concern that some MPs were abusing the duty free privileges on personal motor vehicles loans by extending them to non-privileged third parties. MRA asked the Speaker to sensitise Members of Parliament to avoid abusing the facility.  n