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Government raises K650 billion from debt market

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Betchani Tcheleni

The Treasury borrowed about K651 billion between January and November 2020 through the debt market on the Malawi Stock Exchange (MSE), available figures show.

In an interview, MSE Chief Operations Officer Kelline Kanyangala said the debt market had 16 government notes with a face value of over K650 billion.

She said the market also raised K41.7 billion through the listing of new counters, namely FDH Bank plc and Airtel Malawi plc.

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In an interview last week, The Polytechnic-based economist Betchani Tchereni said the move entailed that the government helped in inducing vibrancy on the financial market.

“The vibrancy may give more options for financial assets than what we have now. This then can create financial depth for our financial markets. Again, such borrowing may help to raise long-term development resources for the government enabling the construction of infrastructures across the country,” Tchereni said.

He said, as government’s probability of default was lower, most people would opt for participating in stock exchange activities.

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This, he said, may be an indication that people have resources in Malawi.

He expressed hope that the cheaprer resources being obtained were being used for the intended purposes.

In a recent interview Ministry of Finance spokesperson Williams Banda said the government had an operational Debt Management Strategy, which, among other things, intended to restructure the country’s debt in both the short term and long term.

“The strategy focuses on borrowing externally as they are concessional and cheaper. Government has therefore put in place turn-around strategies to tame the accumulation of domestic debt by prioritising spending and strengthening its debt management function,” Banda said.

He added that the government would ensure prudent borrowing and seek to contract external loans on concessional terms where possible.

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