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Government to borrow K580.9 billion in last quarter

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Sosten Gwengwe

The government plans to borrow K580.96 billion between January and March 2023 through Treasury bills and Treasury notes, a government securities issuance calendar released by the Reserve Bank of Malawi (RBM) has shown.

The calendar indicates that in January, government will borrow K61.3 billion in Treasury bills and K134.4 billion in Treasury notes.

In February, the government is expected to borrow K96.1 billon through Treasury bills and K99.3 billion through Treasury notes while in March the government is expected to use Treasury bills to borrow K71.3 billion and K118.2 billion through Treasury notes.

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In total, the government is expected to borrow K228.8 billion through Treasury bills and K351.9 billion through Treasury notes in the last quarter of the 2022-23 national budget.

Financial Market Dealers Association President Leslie Fatch indicated in an earlier interview that government was expected to make such moves not only to fund its operations but to control the flow of money.

He indicated that money supply is expected to increase in the last quarter due to huge maturities of other government securities.

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“Government would not let all the maturities flow. Therefore, it is likely that it will borrow back the money to control the flow which, if left unchecked, is inflationary,” Fatch said.

The development comes at a time government is planning to reduce its borrowing, especially on the domestic front.

Speaking during the first pre-budget consultation meeting in Blantyre, Minister of Finance and Economic Affairs Sosten Gwengwe said Treasury has placed different strategies to reduce debt.

“We will be prioritising grants and support from a group of development partners called Friends of Malawi including the International Monetary Fund (IMF). They are mobilising grants to help restructure Malawi’s debt,” Gwengwe said.

Currently, Malawi’s debt, both domestic and foreign, is at K7.3 trillion, which is 64 percent of the country’s gross domestic product..

Meanwhile, the government is expected to pay K345.5 billion in form of Treasury securities maturity in the same period.

A financial market developments report published by RBM last week shows that the government is expected to pay K193.6 billion in January, K112.2 billion in February and K97.7 billion in March.

However, commercial banks are expected to pay RBM K56.8 billion in Open Market Operations repos maturities and K351.8 billion in reverse repos during the same period.

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