By Wezzie Gausi:
Secretary to Treasury, Betchani Tchereni, has indicated that the government does not intend to restructure any of its domestic debt unlike worries among local players in the financial sector.
This follows revelations that the Ministry of Finance has today started negotiations with development partners and financial institutions to source financing for various government projects in the 2024/25 National Budget and cover for arrears.
While confirming the development, Tchereni declined to disclose the amount being searched for but was quick to say the arrears in question are those accumulated in the 2023/24 financial year.
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“As government we always rely on partners and other financial institutions to help us when need arises. This process happens now and again, and it is worth noting that there is a good relationship between financial institutions and the government.
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“We also understand worries regarding debt restructuring. But we are here to assure the financial institutions that the debts that are going to be restructured are not domestic, so there is no need for panic,” Tchereni said.
restructuring is not an option
In an earlier interview, Bankers Association of Malawi president MacFussy Kawawa said ignoring the fact that local debt restructuring would hurt some financiers and the economy, commercial banks are already paying some price through that tax of additional 10 percent for those that make more than K10 billion profit.
“In fact, the recent past finance minister informed banks that this was implemented as a lesser evil and alternative to debt restructuring. The new minister also recently reassured banks that local debt restructuring wasn’t an option being considered, learning from the Ghana experience. It would therefore be surprising if the government took the path,” Kawawa said.
Minister of Finance Symplex Chithola Banda is expected to present the 2024/25 budget on February 23.
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In 2023/24 financial year, budget deficit was projected at K1,234.39 billion representing 8.1 percent of GDP.
The deficit was to be financed by net foreign borrowing amounting to K131. 46 billion earmarked for projects and net domestic borrowing amounting to K1,102.93 billion.
