The government, through the Reserve Bank of Malawi (RBM), raised K31.13 billion from the from Treasury bills last week, indicating continued fiscal strain and heavy reliance on domestic borrowing.
According to Bridgepath Capital’s Financial Market Update for the week ending January 23, 2026, the funds were mobilised entirely through Treasury bills across the 91-day, 182day and 364-day tenors through three Treasury Bill auctions, including two re-openings held by RBM on January 22 and 23, 2026.
The report shows that investor demand remained strong, with applications totalling K142.44 billion, meaning only about 22 percent of bids were accepted. Most of the appetite was concentrated in short-dated paper, with the 91-day Treasury Bill accounting for 43.81 percent of total subscriptions, followed by the 182-day Treasury Bill at 44.84 percent and the 364-day at 11.35 percent.
In a notable development, the yield on the 91-day Treasury Bill declined to 15 percent from 16 percent in the previous week, signaling easing pricing pressures at the short end of the market. Yields on the longer dated bills remained unchanged at 20 percent for the 182-day and 26 percent for the 364-day instruments.
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The RBM yield curve for government securities during the week under review showed that Treasury notes were steady, with the two-year one at 28.75 percent, three-year one at 30 percent, five-year one at 32 percent, seven-year one at 34 percent and 10year one at 35 percent. Analysts say continued heavy domestic borrowing reflects mounting fiscal pressures.
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RBM statistics indicate that the fiscal deficit ballooned to K76.4 billion in November 2025 from K10.8 billion in October while cumulative fiscal deficit between April and November in the current fiscal year reached K1.45 trillion. Economic analyst Marvin Banda said borrowing patterns remained troubling at a time the government was debt distressed and claiming to operate under austerity measures.
“Borrowing continues to remain on the short end, which is indicative of economic uncertainty and an appetite for expensive debt because the yield curve is steepest at the short end, with an 11- percentage- point spread between the 91-day and 364-day Treasury bills compared to a 6.25-percentagepoint spread between the two-year and 10-year notes,” Banda said.
Banda observed that despite looming prospects of debt restructuring, the domestic market has, so far, maintained its appetite for lending to the government.
“It is not surprising that the market is yet to factor in the full implications of a potential rate haircut because it could be mere lip service. Also, Treasury bills are viewed as relatively risk-averse, with most awards concentrated in the 91-day paper rather than longer-dated instruments because of yield spreads,” he said. According to Banda, the further steepening of the curve suggests that market players are weighing both macroeconomic fundamentals and government policy signals.
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However, he said that unless alternative low-risk investment opportunities emerge at cheaper rates, the trend is unlikely to reverse.
“Even after potential debt restructuring, government securities will likely remain the most risk-averse investment option in the market,” Banda said. As of September 2025, total public debt stood at K22.4 trillion, with domestic debt comprising over 55 percent of the total public debt stock.
