Treasury on Monday moved in swiftly to settle K68 million telephone bills incurred by State Residences, when it was apparent that the Malawi Telecommunication Lim¬ited (MTL) was about to disconnect the State Houses.
While Presidential Press Secretary Steven Nhlane told Malawi News in an interview on Thursday that the bills dated back to 2009, the Ministry of Finance Spokesperson Nations Msowoya said the bills had been accumulated over a period of nine months.
An MTL source said they started becoming impatient with the presidency over failure to settle the bills. "The bill you are talking about for telephone usage is the responsibility of Treasury under vote 271," explained Nhlane. "So ask Treasury. Treasury can also explain how old the bill is."
Msowoya said in an interview on Wednesday that indeed they had to pay telephone Bills for State Residences.
"I can confirm that Treasury through the Accountant General has indeed paid K68 million as telephone bill for State Residences," said Msowoya in an email response.
He explained that the background to this arrangement is that some years back Government took a decision to centrally pay all utility bills that include telephones, water and electricity for security institutions such as the Police, Prisons, Malawi Defence Force and State Residences.
"Prior to this decision these institutions were responsible for their utility bills, however, when it came to actual payment of their bills these institutions were not prioritizing utilities, as such it was the utility companies that were suffering due to unpaid bill," explained Msowoya.
He said as a way of avoiding arrears on utilities, the Government decided that it will centrally pay for utilities for the security institutions under vote 271 of the nation budget which is under Accountant General.
In December last year State House was forced to dispute media reports that it had overblown its whole allocated budget of K2.6 billion for the 2012/2013 financial year.
Nhlane then explained that the Treasury allocated K1.8 billion for the 2012/13 fiscal year; which was 53.9 percent lower than the actual budget of K2.5 billion provided for the 2011/12 fiscal year.
He said the previous administration had also left debts amounting to K600 million.
Out of the K1.8 billion allocated for this financial year, State House paid some of the outstanding debts amounting to K400 million.
Nhlane said the projected expenditure for the 2012/13 fiscal year would be K2.6 billion which is 32 percent lower than the previous fiscal year's budget.
The projected budget, Nhlane said, would slightly go up due to the normal budget assumptions that included inflation, motor vehicle running costs, devaluation, fuels costs, arrears of debts, and what it called 'transitional expenditures'.
The State House claimed that some of the K600 million debts from the previous regime date back to 2009 and some are related to the former president Bingu wa Mutharika's wedding with Callista Mutharika and it included expenses on wedding cards, air travel and lodging.
"Government has an obligation to pay its creditors, the majority of whom come from the private sector which is the engine for economic growth," said Nhlane.
"Most government creditors get loans from commercial banks in order to supply goods and services to government," he added.
He said not paying them is, therefore, killing the very sector that is supposed to play a leading role in turning around the economy.
However, the MTL source said the company was becoming impatient with government's failure to settle the telephone bills prompting them to take a bold step, where they almost disconnected the State Residences.