Malawi government’s external debt has increased to K2.8 trillion as at end of last year from K2 trillion in 2020, latest figures from the Reserve Bank of Malawi (RBM) have shown.
According to the figures, multilateral debt has increased to K1.9 trillion, bilateral debt has moved to K368.3 billion, commercial debt is at K540.3 billion, debt service is at K90.9 billion and interest payment has increased to K18 billion from K15.3 billion in 2020.
Commenting on the rising figures, economist from Malawi University of Business and Applied Sciences Betchani Tchereni said while foreign borrowing is deemed cheaper, unsustainable borrowing still has an impact on the economy.
He said much of the debt is for consumption or for repayment of other debts.
“External debt is repaid in dollars which is grave for a struggling country like Malawi therefore the country should be borrowing for a purpose because for example, if such an amount was borrowing for establishment of industries, we would have been having a lot of industries that can widen our export base,” Tchereni said.
Figures from the Ministry of Finance show that Malawi’s total debt stock (domestic and external combined) is at around K5.7 trillion, a figure which economists have warned will reach unsustainable levels if not kept in check.
When presenting the 2022 National Budget, Minister of Finance Sosten Gwengwe said high level of external debt is a matter of concern for the current administration and particular attention will be paid to make the debt sustainable.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
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