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Finance Minister Goodall Gondwe has expressed surprise with a statement made by Thyolo Central MP Bob Khamisa (UDF) that government should not stop borrowing from the multilateral donors if it is to have its external debt forgiven.
Khamisa told Parliament on Wednesday that the Minister of Finance should ensure that the government does not stop borrowing from the donors as this puts Malawi in an advantageous position of having all its debt forgiven.
He claimed that Zambia had more than double Malawi’s external debt of about K405 billion (US$3 billion) but never stopped borrowing. He said in so doing, the donors raised more money from interest and decided to write-off all of Zambia’s debt as a reward.
“Madam First Deputy Speaker, I would like to point out the fact that since we are close to debt forgiveness, let’s not stop borrowing. Government should at all cost continue borrowing so that our debt is forgiven. Our friends in Zambia did that,” said Khamisa drawing laughter and jeers from other members.
But Gondwe disagreed with Khamisa’s advice in an interview saying the government cannot borrow huge amounts just for consumption.
“Actually, I didn’t know what he meant. We don’t borrow just for the sake of borrowing. We borrow for appropriate projects so that the money can be used for development purposes and generate further incomes to repay the old debt,” said Gondwe.
Gondwe indicated that after the cancellation of debt, which he said is expected to take place later this year by the G8, government intends to start borrowing with caution.
“After that, we will have to regroup and see how we can fund our programmes but most of it will be grants,” he said.
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