Advertisement
Business

Government credit up by K81.6 billion

Advertisement

By William Kumwembe:

Net credit to the central government went up by K81.6 billion to K547.4 billion in March 2019, figures from the Reserve Bank (RBM) of Malawi show.

RBM March 2019 Monthly Economic Review shows that government’s net borrowing from the central bank increased by K62.0 billion to K144.5 billion.

Advertisement

Similarly, central government net credit from commercial banks increased by K19.6 billion to K402.8 billion on account of a K26.6 billion Treasury notes uptake by the commercial banks.

In the month under review, Treasury bills (TBs) amounting to K3.8 billion matured, reducing the outstanding stock of the TBs held by commercial banks to K215.1 billion.

“Further, government deposits with the commercial banks rose to K70.4 billion in the month from K67.6 billion in the preceding month. Commercial banks’ credit to State-owned enterprises grew by K7.5 billion to K44.5 billion as at end-March 2019,” reads the report.

Advertisement

Overall, banking system outstanding stock of credit to the domestic economy increased by K88.6 billion to K1,034.2 billion in the month.

During the review month, the banking system’s outstanding claims on the private sector, however, declined by K453.9 million to K442.6 billion.

Following a slash in policy rate by 1.5 percentage points from 16 to 14.5 percent in January, expectations were that credit to the private sector would surge.

“The decrease in private sector credit was mainly because of seasonal slowdown in economic activity the country experiences in the first three months of the year and political uncertainty as the country is heading towards elections in May 2019,” RBM says.

In the month, loan repayments by commercial and industrial sector amounted to K10.6 billion, reducing the stock of credit to this sector to K162.2 billion as at end-March 2019.

In its 2019 first quarter Economic Review, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) said the increase in government borrowing from the domestic market was likely to push interest rates upwards.

It said the increase in government borrowing from the domestic market was likely to push interest rates upwards.

MCCCI reiterated that public debt was stifling the country’s economic growth strides.

The chamber said economic gains registered in the first three months of the year were threatened by increasing public debt levels.

Facebook Notice for EU! You need to login to view and post FB Comments!
Advertisement
Tags
Show More
Advertisement

Related Articles

Back to top button
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker