Government borrows K1 trillion in 5 years

Not much to show on the ground


By Rebecca Chimjeka


Government has borrowed about K1.009 trillion since 2014 when Democratic Progressive Party (DPP) bounced back into power, Malawi News investigations have revealed.

The investigations have revealed that, in the past five years, Parliament has passed a total of 36 loan authorisation bills, giving a go-ahead to government to borrow the money.


With external debt seen at K1.558 trillion as at December 31 2018, the development means foreign debt has almost tripled over the past five years.

Ironically, despite the accelerated government’s borrowing, Malawi News has discovered that there are little to no progress in some projects that government borrowed money for.

For example, government has been borrowing money for rehabilitation of Chileka International Airport since 2015 but little progress has been recorded on the project.


Parliamentary documents indicate that, in 2015, government borrowed €21 million (about K17 billion) from the European Investment Bank for upgrading of aviation safety and security equipment at Chikeka and Kamuzu international airports.

In 2018, the same government borrowed $168 million (about K124.3 billion) from the Export and Import Bank of China for Chileka Airport.

And presenting the 2019/20 national budget in Lilongwe Monday, Finance Minister Joseph Mwanamvekha indicated that government has also earmarked K2.5 billion for the same project.

Again, in 2016, government borrowed €80 million (about K65 billion) for the rehabilitation of M1 Road but very little progress has been recorded on the project.

In addition, despite government borrowing 160 million Yuan (about 17 billion ) from China for the national fiber in 2016, the project is yet to roll out.

Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said there is a need for the country to up our capability on project management and monitoring.

“In other words, we need to become more efficient, even if this means outsourcing this task or reforming our project management system, we need to do because the loss owing to delayed implementation is enormous,” Kalilombe said.

On borrowing, Kalilombe said there should be more to be done for projects that spur productivity and thus aid in economic growth.

He pointed out that, when the repayment obligations fall due, they should be serviced from increased revenues earned from the increased economic activities.

He added that if this is not done, then the risk is high where the country will end up in a situation where a large percentage of the expenditure will be towards debt repayment with no room for development expenditure and even exert pressure in meeting essential expenditures like social services.

He cited an example that the airports should improve the country’s accessibility, thus results in ease of people coming into country for business and/or tourism.

Budget and Finance Committee of Parliament Chairperson Sosten Gwengwe said there is, indeed, little value to show for our loans and that is why taxpayers keep asking government to slow down on borrowing.

“Best way to get out of borrowing is to work within our means. Stop coming up with populist budgets,” Gwengwe said.

Treasury spokesperson Davis Saddo could not be drawn to paint a clear picture on progress recorded so far in various projects being implemented using borrowed money.

But Mwanamvekha Monday admitted that government is facing challenges in fiscal deficits and public debt.

He noted that, as at end December 2018, government debt stood at 62 percent of gross domestic product (GDP).

“One of the major concern in Government is the astronomical increase in public debt. For the 2019/20 fiscal budget, payment of interest on the country’s public debt is projected at K243.9 billion or 3.9 percent of GDP representing 8.8 percent increase from the amount paid during the last financial year.

“Of this total, K15.5 billion is for foreign interest payment while K228.5 billion is for domestic interest payment,” Mwanamvekha said.

He said Treasury has put in place policies that would help debt to start declining in the medium to long term.

He said the Medium Term Debt Strategy has outlined measures that will translate into a reduction in domestic debt to 20 percent of GDP by 2023.

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