UNPAID debts to contractors, suppliers and service providers came up as a major debating issue in the National Assembly yesterday, with MPs calling on the government to address the matter urgently.

Bupe Mwakang’ata (Special Seats) said during the question and answer session that the government will pay contractors and suppliers in Rukwa Region awaiting payment for up to five years.

The various individuals have faced severe financial hardship, including asset seizures due to delayed payments, she said, noting that many contractors and suppliers have had to borrow from banks to complete their work, yet the government has not paid them on time.

“As a result, numerous individuals have lost their homes and vehicles. When will the government settle these debts?” the MP demanded, pointing out that numerous debts have been verified for over six months but remain unpaid, with arrears ranging from two to five years. 

Esther Maleko (Special Seats) expressed concern over the same problem, straining relations between the government and contractors, wondering if the government does not recognise the urgency of resolving these debts, even with the financial ruin many contractors are facing.

Cecilia Paresso (Special Seats-Opposition) asked the government to explain delays of payments to foreign contractors which are paid with interest, whereas local contractors do not receive timely payments, and have no eventual interest payment.

Cecilia Paresso, Special Seats MP (Chadema), requested an explanation from the government as to why delays in payments to foreign contractors incur interest, while local contractors do not receive timely payments or interest.

Dr Mwigulu Nchemba, the Finance minister, said in response that while the government has not halted payments, it has been managing a backlog of long-standing debts.

He urged MPs to understand government efforts in addressing the debts, noting that some of them are outstanding for up to seven years. Debts from as far back as 2013 have been settled, while it is not feasible to allocate sufficient sums in one year to clear the debts as it impacts other government activities, he stated.

The government will be clearing these debts for service providers, suppliers and contractors, he said, citing nearly 400bn/- allocated for the purpose last financial year, while in this year’s estimates  the amount has been raised to 600bn/-.

The government is committed to increasing those allocations on the basis that economic activities and capital layouts are not adversely affected, he stated, affirming that future budget estimates will be adjusted to ensure a substantial portion of these debts is cleared, to settle all outstanding amounts if possible.

He said that foreign contracts are hired on the basis of international interest rates, whereas domestic contracts are hired on the basis of what the government provides, while the Treasury was making efforts to limit interest payments due for foreign contractors.

It has introduced new contractual arrangements for irrigation geared to avoid late payment costs, he said.

Hamad Hassan Chande, the deputy minister, had earlier stated that the government allocates funds specifically for paying verified and approved debts, as audited by the government internal auditor.

During fiscal 2023/24, upwards of 600bn/- was allocated to settle these debts, and by the end of June a total of 491.25bn/- had been disbursed, he added.