The government’s borrowing through Treasury bills and Treasury notes in 2023 amounted to K1.8 trillion, with a marginal increase by 0.7 percent compared to 2022.
This is according to the Bridgepath Capital Annual Report covering 2023.
The report says during the 12-month period to December 2022, the government used Treasury notes and Treasury bills to borrow K1.83 trillion.
The local financial advisory firm attributes the marginal increase to increasing fiscal deficits, which are being financed through both domestic and foreign borrowing.
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“The closing average TB yield increased to 18.90 percent in 2023 from 16.67 percent in 2022. Likewise, the closing average TN yield increased to 29.95 percent in 2023 from 25.7 percent in 2022,” the report reads.
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During the 2023-24 government fiscal year, the overall fiscal balance was estimated at a deficit of K1.32 trillion, which is 8.7 percent of GDP, an improvement of 0.01 percent from the previous year’s 8.8 percent likely outcome.
The then minister of Finance and Economic Affairs Sosten Gwengwe said the deficit was to be financed through foreign borrowing amounting to K288.78 billion and domestic borrowing amounting to K1.19 trillion.
During the 2024-25 pre-budget consultation, the Institute of Chartered Accountants in Malawi and the Malawi Confederation of Chambers of Commerce and Industry asked the government to work towards managing its debt.
Icam Chief Executive Officer Noel Zigowa said borrowing is detrimental to the country’s economy because a lot of money is spent on interest payment, which cannot help the country to grow.
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“The government should manage existing debt and negotiate for better interests going forward because, as a country, we cannot continue spending huge amounts of money on interest,” he said.
Speaking during the consultations, Minister of Finance and Economic Affairs Simplex Chithyola Banda said the government is working towards making sure that debt is sustainable.
“The government has set out the macroeconomic framework for the 2024-25 budget that looks at the macroeconomic targets such as fiscal and monetary policy measures and the debt sustainability targets to be achieved by the end of the fiscal year,” Banda said.
By November last year, Malawi’s total public debt stock had increased from K10.60 trillion to K12.56 trillion.
