As of September 2024, Malawi’s public debt has escalated to K16.19 trillion, constituting 86.4% of GDP. The Minister of Finance announced ongoing negotiations with creditors for debt restructuring and emphasized efforts to improve debt management and utilize concessional loans for priority sectors.
Malawi’s public debt has surged to K16.19 trillion as of September 2024, representing a striking 86.4% of the nation’s GDP. This alarming figure was disclosed by the Minister of Finance, Simplex Chithyola Banda, during the presentation of the national budget for 2025/2026. The increase in public debt is significantly attributed to the government’s dependence on loans to finance its expenditures.
Currently, Malawi’s external debt is estimated at K7.39 trillion, while domestic debt amounts to K8.79 trillion. In an effort to address the escalating debt situation, Minister Banda stated that the government is negotiating with official bilateral creditors and commercial creditors to restructure this debt. Banda expressed optimism, indicating that once negotiations are finalized, they would alleviate the strain on foreign exchange reserves and create fiscal space conducive for productive investments.
To curb the mounting debt, the government is intensifying its efforts in enhancing both debt and cash management. Plans include seeking concessional loans and strategically targeting borrowings in key sectors. “To tame the growing debt, the Government has stepped up its efforts to strengthen debt and cash management,” said Banda. Additionally, measures such as implementing commitment controls and limiting the issuance of guarantees are being put in place.
The government has also initiated the Integrated National Finance Framework, aimed at broadening resource mobilization strategies for sustainable national development. This framework emphasizes not only a systematic approach to debt management but also the diversifying of financing avenues to support crucial national projects effectively.
In summary, Malawi’s public debt has reached a critical high of K16.19 trillion, necessitating urgent restructuring and management strategies. The government is actively pursuing negotiations with creditors and implementing measures to enhance fiscal responsibility. Through these initiatives, officials aim to stabilize the economy by ensuring sustainable development and effective utilization of resources for priority sectors.
Original Source: malawi24.com
