Commercial banks continue to dominate the government’s debt portfolio, with recent figures showing the government owes them approximately K2 trillion.
This is almost half of the cumulative domestic public debt seen at K4.04 trillion,
This was revealed during a consultative meeting conducted in Blantyre by Malawi Economic Justice Network (Mejn).
According to figures presented by the Treasury, of the amount, approximately K1.6 trillion was secured through the Reserve Bank of Malawi while approximately K500 million was secured from insurance companies and less than K300 million from other private sector players.
Mejn Executive Director Bertha Phiri said elevated domestic borrowing remains costly for the country.
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“If we continue on this path, we are putting the economy at higher risk because we will not be having enough money to service the debt and the economy is not also growing at desirable levels and we depend on taxes for revenue collection,” Phiri said.
Ministry of Finance Chief Debt and Aid Officer Tiyamike Kanthambi said the government has deployed different measures to make sure that it avoids expensive debt and reduce the current debt levels.
“Our short-term debt management strategy focuses much on advancing concessional loans and we believe that, with these strategies, our debt levels will go down and be maintained at good levels,” Kanthambi said.
Economics lecturer at Malawi University of Business and Applied Sciences Betchani Tchereni said this explains why commercial banks make “super normal” profits.
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“My advice to the government is that we should abandon the current way of borrowing and focus on concessional deals that even if is borrowing from the banks, we should be negotiating for concessional loans because that way, it will be less expensive,” Tchereni said.
Public debt stands at K9.4 trillion as of March this year out of which K4.04 trillion is domestic while the rest is foreign.
