Scotland-based economist Velli Nyirongo has predicted a possible continued rise in public debt in 2025.
As at mid last year, Malawi’s public debt was seen at K15.1 trillion.
According to Nyirongo, without significant growth in revenue or reduction in fiscal deficits, Malawi’s debt burden is likely to rise further in 2025.
“Government expenditure may continue to rise, driven by infrastructure development or recovery efforts.
- Advertisement -
“However, achieving higher revenues will be crucial to avoid unsustainable borrowing,” Nyirongo said.
- Advertisement -
He added that there were measures that could be taken to address the problem.
“Stability in tax rates and increased government spending could support economic activity, but high debt and governance challenges may limit growth,” he said.
In recent years, a fast-paced growth in budgetary needs, coupled with subdued growth in revenue, has seen the budget deficit growing, leaving the authorities with little to no options other than resorting to heavy borrowing.
Nyirongo has since recommended that the authorities should strengthen revenue mobilisation efforts to reduce fiscal deficits.
- Advertisement -
“Efforts to narrow the budget deficit as a percentage of gross domestic product (GDP) may continue, but challenges in expenditure control and revenue generation could hinder progress. Furthermore, we need to implement stricter anti-corruption measures to improve governance and attract investment. Prioritise spending on productive sectors to stimulate sustainable economic growth and monitor and manage debt levels to avoid a debt crisis,” Nyirongo said.
Recently, Norwegian Church Aid and Dan Church Aid (NCA/DCA) Country Director for Malawi Joint Country Programme Stefan Jansen described Malawi’s public debt as unsustainable, unjust and deeply heartbreaking.
Speaking when he delivered a keynote speech during a faith mother bodies training on tax, debt and illicit financial flows and their impact on development, service delivery and social protection, Jansen said debt servicing consumes resources that should be saving lives, educating children and feeding people.
“In this financial year alone, public debt swallowed twice the health budget, seven times the education budget and three times the agriculture budget. These numbers aren’t just statistics; they represent mothers who cannot access hospitals, children left without books and farmers struggling to grow the food that sustains us,” he said.
In his mid-year budget review statement, Finance Minister Simplex Chithyola- Banda acknowledged the debt burden facing the country, saying, to contain it, the government would enhance efforts to mobilise domestic resources to finance the budget.
