Government to create Debt Retirement Fund

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By Earlene Chimoyo

The Government has revealed plans to set up a Debt Retirement Fund with an aim to facilitate servicing of the country’s growing public debt currently standing at a whopping K4.1 trillion.

The combined domestic and foreign liability is almost twice the recently proposed national budget.

In his presentation of the budget statement in Parliament last Friday, Finance Minister Felix Mlusu stressed the need for the government to explore ways of cutting back on its debt.

“Malawi’s domestic debt is currently rated at high risk of debt distress, and in order to repay this huge debt, Ministry of Finance is looking at a possibility of establishing a Debt Retirement Fund,”

 

According to Mlusu the proceeds in the Fund will be ring-fenced and strictly be used to retire public debt until debt levels subside to sustainable levels.

 

Meanwhile, Economist and Dean of Commerce at the Polytechnic Betchani Tchereni welcomes the idea of creating a Debt Retirement Fund.

“For a country which is serious about stabilizing its macroeconomic environment, that is the way to go, we have a macroeconomic environment which needs to be stable, not cosmetically stable, it has to be stable indeed,"Tchereni said.

Tchereni added that such a move is advantageous to the Malawi government, as it has a potential to retain donor confidence, stressing that currently Malawi needs development partners to assist it with its growth and development agenda.

It is envisaged that that initiatives such as the one made by the Tonse Alliance administration on addressing its debt challenge can prove influential attracting partners on development.

“We need to be seen that we are serious with all our issues including the escalating debt problem,” Tchereni stressed.

There are high hopes that if such a fund is set up and implemented efficiently the country may be able to address its debt challenges.

 

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