Debt retirement fund operational

Betchani Tchereni

The amendment and subsequent assenting to the Public Finance Management Act, among other things, entails the operationalisation of the Debt Retirement Fund to be used to service public debt, which remains elevated.

The legislation for the establishment of the fund was embedded into the Public Finance Management Act amendment which Parliament passed in the just, ended meeting and was recently assented to by President Lazarus Chakwera.

According to the Minister of Finance Sosten Gwengwe, the government will start generating resources into the fund after mid-year budget review.


The fund is created amid a continued rise in public debt stock, which, as at June 2021, stood at K5.5 trillion or an equivalent of 59 percent of the rebased gross domestic product (GDP).

The amount represents almost double the size of the 2022-23 National Budget pegged at K2.84 trillion.

“We intend to allocate some seed resources to the fund, which can be appropriated by Parliament during the mid-year budget review,” Gwengwe said.


Already, the International Monetary Fund ranked Malawi among regional countries facing a threat of continued rising debt-to- GDP-ratio due to global economic woes coupled with structural domestic challenges.

Local economists have warned that, if not managed now, the debt will reach unsustainable levels which, in turn, will heavily affect the overall economic performance.

But economist from the University of Business and Applied Sciences Betchani Tchereni applauded the move to have a debt retirement fund in place, arguing that, in its absence, funds that are meant for other projects are channelled towards debt repayment.

Tchereni added that, with the country’s history of misuse of resources, relevant government agencies such as the Auditor General’s Office and the Accountant General Office should be vigilant in protecting the funds.

“It is a fact that our public pulse is lean and the fund may contract it further but, then, pushing the debt forward will not help this country either. Therefore, it is better we start addressing it now than later,” he said.

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