Malawi’s public debt stock has increased by nearly three quarters over the past five years from K2.41 trillion to K4.1 trillion while the fiscal deficit has surpassed the Sadc set threshold of four percent of Gross Domestic Product (GDP).
This is according to figures made available by Action Aid International Malawi (AAIM) Country Director, Assan Golowa.
Golowa said this in Lilongwe during a press briefing the Feminist Macro Economics Alliance Malawi (FEAM) organised as part of The Global Week of Action (GWOA) for Debt Cancellation.
FEAM is women’s rights centred coalition comprising Action Aid Malawi, NGO Gender Coordination Network, Malawi Human Rights Resource Centre, Every Girl in School Alliance (EGISA) and Activista Youth Network.
The organisation is raising awareness on debt, calling for cancellation and amplifying civil society and social movement voices on fiscal justice and public services.
The coalition is part of the Global Alliance on Debt Cancellation with support from the African Women’s Development and Communication Network (FEMNET) and Open Society Initiative for Southern Africa (OSISA).
Golowa said with the unsustainably high debt, Malawi will, in the 2020/2021 fiscal year, likely spend more money on debt servicing to rich governments or foreign-lender institutions than in healthcare or other key public services.
“The current National Budget shows that the second largest share of 17 percent has been allocated to debt charges yet Health and Population Ministry only has a share of nine percent.
“This situation is pathetic especially considering the current public health crisis of coronavirus and there is no doubt that this will force the government to take fresh loans to finance Covid-19 response and recovery, which will result in deeper debt problems soon,” he said.
According to Golowa, the initial mapping by allies shows that these loans will come with conditionalities, a situation that will foster a return of regressive austerity policies and underfunded public services.
He said even before the Covid-19 crisis hit, Malawi was already one of the least developed countries that faced debt crisis and the country was already spending more on debt payments.
Golowa stated that without debt cancellation, many developing countries, including Malawi, are likely to spend many years enduring reduced capital availability and severely restricted spending on public services and other necessities thereby creating yet another ‘lost decade’.
“Therefore, we call on world leaders, financial institutions, public and private, to take urgent, just, ambitious action, in compliance of their obligations and responsibilities and commit to the unconditional cancellation of public external debt payments by all lenders—bilateral, multilateral and private lenders —for all countries in need for at least the next four years,” he said.
Former Salima North West parliamentarian, Jessie Kabwila said developed countries and international money lenders have a moral obligation to cancel the debts owed to them by poor countries such as Malawi.
Chancellor College-based economic professor, Ben Kalua, observed that accumulated debts have been one of the challenges hindering the acceleration of social and economic development of Malawi as government preoccupies itself with debt servicing, instead of improving public service delivery.
Finance Minister, Felix Mlusu, said there is need for collaboration among all the stakeholders in pushing for debt cancellation.