The Ministry of Health owes various suppliers of goods and services about K5.7 billion and indications are that only a fraction of this will be settled in the current financial year.
The K5.7 billion include utility bills, rentals and drugs and is the ministry’s contribution to the arrears government accumulated in the 2013/14 financial year
In his budget statement, Minister of Finance, Economic Planning and Development Goodall Gondwe said of the K340 billion arrears incurred by May 31 2014, government had committed to a schedule of payment starting with K50 billion from the 2014/15 national budget.
Gondwe told Parliament: “As a matter of policy, the government will review each claim and will commit to a schedule of payments. Repayment of arrears has already started and will continue more systematically on the approval of this budget.”
The highest amount of debt was accrued for drugs collected by central hospitals from various suppliers amounting to K2 billion.
There are also millions owed to various contractors for work done on rehabilitation of referral hospitals, staff housing under the Umoyo project and construction of warehouses.
Parliamentary Committee on Health chairperson Juliana Lunguzi said Ministry of Health officials informed them that the arrears would be paid centrally not from the ministry’s allocation in the 2014/15 budget, which amounts to K65.2 billion including allocations for district councils and National Aids Commission (NAC).
Said Lunguzi: “This whole amount will not be paid this year, which means those who won’t be paid their arrears will withhold further services and district health offices will continue to suffer. We are worried because donors are skeptical and they don’t want their money used for that purpose [to pay arrears].”
Malawi Health Equity Network executive director Martha Kwataine said the solution was for government to identify resources and provide the ministry what they need.
“It is sad that we have such a situation at hand. We do not need cement and iron sheets subsidy. Take money from there and allocate to the Ministry of Health. If suppliers close hospitals, it will backfire on government and that will be embarrassing. We cannot bank on donors for medicines whilst allocating our own money to areas that are not a priority,” Kwataine said.
The Ministry of Health also has a K1 billion gap in counterpart funding with Global Alliance for Vaccinations Initiative for immunisations.