As of September 2024, Malawi’s public debt stands at K16.19 trillion, comprising 86.4% of GDP. The government is negotiating debt restructuring with creditors and aims to strengthen its fiscal management to ease financial pressures and support productive investments.
As of September 2024, Malawi’s public debt has escalated to K16.19 trillion, representing 86.4% of the nation’s Gross Domestic Product (GDP). Minister of Finance Simplex Chithyola Banda disclosed this information during the presentation of the 2025/2026 national budget. The substantial increase in debt mainly results from the government’s reliance on borrowing to finance its expenditures, which has reached alarming levels.
The current external debt amounts to K7.39 trillion while domestic debt totals K8.79 trillion. Minister Banda indicated that the government has established agreements with official bilateral creditors and is engaged in negotiations with commercial creditors to facilitate debt restructuring. He asserted that the successful completion of these negotiations would alleviate pressure on foreign exchange rates and create the necessary fiscal space for productive investments.
To mitigate the rising debt burden, the government intends to enhance its debt and cash management strategies. This includes the pursuit of concessional loans and strategically targeting borrowing to support priority sectors. Additionally, the government aims to leverage alternative financing channels to maximize resource mobilization for sustainable development.
Key measures include implementing commitment controls, restricting the issuance of guarantees, and formulating a comprehensive framework to evaluate and manage guarantees and borrowing practices of state-owned enterprises. Furthermore, the Integrated National Finance Framework has been developed to diversify resource mobilization initiatives, promoting sustainable national growth.
In conclusion, Malawi’s public debt has reached an alarming K16.19 trillion, significantly impacting its GDP. The government is actively pursuing debt restructuring and enhancing financial management strategies to address this issue. By focusing on priority sectors and employing innovative financing solutions, Malawi aims to stabilize its economy and foster sustainable development.
Original Source: malawi24.com
