Budget and Finance Committee of Parliament has expressed concern over the rise in domestic borrowing, saying it is risky, consumptive and overburdening.
Chairperson Gladys Ganda made the remarks in Parliament on Thursday when she was responding to the mid-year budget statement by Minister of Finance Felix Mlusu.
Minister Mlusu said in his statement last week that performance of the 202/21 national budget in the first half as well as projected outturn for the second half have necessitated an upward revision of the expected net domestic borrowing requirement from K530.4 billion to K564.4 billion,
But Ganda said her committee is concerned that domestic borrowing is very high and continues to rise further.
“Not only will this lead to high interest payments in future budgets, it is also crowding out the private sector as well as injecting further liquidity in the financial system which will create more pressure on the exchange rate,” said Ganda.
She suggested that Government should live within its means, as it retires part of the debt so that fiscal spaces may be created in future budgets.
On Covid-19 funds, Ganda noted that at the beginning of the 2020/21 Financial Year, K4.4 billion was allocated towards the fight against the pandemic and K17.5 billion has been allocated during the mid-year budget review.
Ganda demanded a report on how Covid-19 funds were utilized amid reports that a huge chunk of K6.2 billion government released last year was mismanaged.
“The Committee is of the view that Government should not put money into a bucket that has holes and is still leaking but rather swiftly arrest the plunder or alter the entire configuration of the Covid-19 Fund Administration,” she said.
She went on to say that the Committee further notes with concern, that no meaningful progress has been made on projects such as Retirement Fund; the establishment of the new program with the IMF and payroll audit.
“The Committee hopes that by the time we convene in June for the main Budget Meeting, all these projects will have been successfully implemented,” said Ganda.
She further said that during its response to the National Budget last year, the Budget and Finance Committee voiced out concern that the growth projections in the budget were highly ambitious for 2020 at 1.9% but their recommendations were not taken into account.
According to Ganda, the actual growth has now turned out to be 0.9 percent.
She said the Budget and Finance Committee also previously raised several points of concern on the main budget and made recommendations most of which the Minister ignored.
“We hope that this time around, the Hon Minister will seriously consider our recommendations. The Committee considers both the outturn and revisions to the 2020/21 Budget as suboptimal in many respects as pointed out,” she said.