- Mr. Speaker, Sir, MalawiвЂ™s external debt problems can be tracked back to the late 1970s. During this period, the debt burden went to crisis levels to the extent that MalawiвЂ™s capacity to accelerate the tempo of economic and social development was adversely affected. Members may wish to know that MalawiвЂ™s medium and long term outstanding debt was about US$2.0 billion by end of 1995 and grew almost to US$2.6 billion by end of 1999, representing an increase of 30 percent.
- In 1999, the Government conducted a Debt Sustainability Analysis, which revealed that Malawi's debt burden had indeed become unsustainable. Malawi, therefore, applied and qualified for debt relief under the Enhanced Highly Indebted Poor Countries (HIPC) initiative in December 2000. Under the initiative, debt relief resources amounted to around US$1 billion over a period of twenty years. Malawi started receiving debt relief in 2001.
- Mr. Speaker, Sir, debt relief resources received to date have been channeled into priority sectors as identified by the MPRSP Process. These areas include Agriculture, Health, Education, Police, Roads, Gender and Labour. Priority pro-poor expenditures in these sectors have been tagged and protected in the budget.
- Mr. Speaker, Sir, allow me to clear some misunderstanding on the utilisation of the HIPC debt relief resources. These resources are not additional or extra resources that can be used on expenditures other than those identified in MPRSP. In addition, Mr. Speaker, Sir, for debt relief to Malawi to be irrevocable, the country must reach the HIPC Completion Point. Reaching the Completion Point involves MalawiвЂ™s economic program supported by the IMFвЂ™s Poverty Reduction and Growth Facility (PRGF) being on track and having at least one yearвЂ™s satisfactory implementation of the MPRSP. It is critical, therefore, that MalawiвЂ™s economic program being supported by the IMFвЂ™s PRGF is on track and that we successfully implement the MPRSP.