The government may have to continue borrowing in the next 10 years and beyond to finance some of the major projects embedded in the Malawi 2063, a long term national development blueprint.
This is amid concerns of rising public debt in the past decade, which has left the country almost in a debt distress state.
Responding to questions on how the plans would be funded amid a squeezed development budget due to Covid and heavy public debt, National Planning Commission (NPC) Director General Thomas Munthali said the government is already at an advanced stage towards establishing a Debt Retirement Fund and some innovative financing mechanisms.
He singled out local bonds and public-private partnership among means through which the projects would be financed.
Munthali said a credit rating process for the country has commenced.
“The 10-year implementation plan interventions will be a collaborative effort of government, private sector and development partners. The latter will mostly be requested to provide catalytic investments.
“Efforts to review and facilitate [work] for a conducive business environment are underway and this will be key in unlocking private investments into the country in support of the Mw2063 aspirations,” Munthali said.
He added that the drafting team, led by the NPC and Ministry of Economic Planning, is at an advanced stage in putting together the 10-year implementation plan including the flagships that will support it.
“To ensure that the plan already begins to inform the next budget (2021/22), we plan to have it ready for Cabinet approval before Parliament meets.
“We are in touch with Treasury so they get to know the priorities that are emerging under each pillar and enabler of the new Vision as they draft the national budget,” Munthali said.
In a separate interview, Ministry of Finance spokesperson Williams Banda said the government will ensure that financing of projects under the Mw2063 would not lead to excess borrowing.
“Currently, we are discussing a plausible way of funding which will not lead to excess borrowing,” Banda said.
Polytechnic-based economist Betchani Tchereni said government borrowing becomes bad when the intention is consumption.
Currently the country’s debt stands at K4.7 trillion.