Malawi’s Public Debt Surges to K16.19 Trillion: Government’s Response Outline

Malawi’s public debt has escalated to K16.19 trillion as of September 2024, making up 86.4% of GDP. The Minister of Finance has cited increased borrowing as a primary factor. To address this, the government is restructuring debt and enhancing financial management practices while targeting investments in priority sectors.

As of September 2024, Malawi’s public debt has reached K16.19 trillion, representing 86.4% of the nation’s Gross Domestic Product (GDP). This significant increase was disclosed by the Minister of Finance, Simplex Chithyola Banda, during the announcement of the 2025/2026 national budget. The government’s increasing dependence on borrowing to fund expenditures has notably fueled the rise in debt levels.

A breakdown of the current debt figures shows that external debt amounts to K7.39 trillion, while domestic debt is calculated at K8.79 trillion. Minister Banda emphasized ongoing efforts, stating that agreements with official bilateral creditors have been established, and negotiations with commercial creditors are in progress to restructure the national debt. He remarked that successful negotiations would alleviate foreign exchange pressures and create necessary fiscal space for productive investments.

The government is also implementing strategic measures to manage the escalating debt situation. These include enhancing debt and cash management practices, seeking concessional loans, and focusing on borrowing for essential sectors. “To tame the growing debt, the Government has stepped up its efforts to strengthen debt and cash management,” noted Minister Banda.

Key initiatives involve enforcing commitment controls, restricting the issuance of guarantees, and developing frameworks to assess and manage state-owned enterprises’ borrowing. Furthermore, the Integrated National Finance Framework has been created to promote diverse resource mobilization for sustainable national development.

In summary, Malawi’s public debt has surged to K16.19 trillion, necessitating urgent government actions to manage the fiscal situation effectively. With significant reliance on both external and domestic borrowing, the government’s proactive measures aim to restructure debt and enhance financial management. Through strategic partnerships and a focus on priority sectors, these initiatives strive to ensure sustainable economic growth and development.

Original Source: malawi24.com