The government is expected to borrow K628 billion from the domestic market in the second quarter of the fiscal year, the Reserve Bank of Malawi (RBM) has said.
The amount represents 52 percent of the K1.19 trillion that Capital Hill intends to borrow for the whole 2023-24 financial year.
In a domestic debt calendar released on Friday, RBM said Capital Hill is expected to borrow the money from local banks, firms and individuals through Treasury bills and Treasury notes.
Treasury bills have short-term maturities and interest is paid at maturity.
On the other hand, Treasury notes have mid-range maturity period and interest is paid every six months.
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“The Reserve Bank of Malawi, as an agent of the Malawi Government, wishes to notify the investing public that an issuance calendar for government domestic debt has been released for the period July to September 2023 in the 2023-2024 fiscal year…” the calendar shows.
It further indicates that a total amount of K102.461 billion will be borrowed through Treasury bills while the remaining K525.618 billion will be borrowed using Treasury notes.
Presenting the 2023-24 national budget to Parliament, Finance Minister Sosten Gwengwe said the overall fiscal balance is estimated at a deficit of K1.32 trillion, which is 8.7 percent of gross domestic product, an improvement of 0.01 percent from last year’s 8.8 percent likely out turn.
Gwengwe said the budget deficit will be financed through foreign borrowing, amounting to K288.78 billion, and domestic borrowing, amounting to K1.19 trillion
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Recently, Budget and Finance Committee of Parliament Chairperson Gladys Ganda warned authorities against spending beyond the agreed amounts.
“Moving forward, there is a need for the government to respect the budget once approved by Parliament. Government needs to control its appetite for overspending as it attracts more borrowing.
“Due to limited resources in the country, it means that any over expenditure translates to more unapproved borrowing. Fiscal prudence should apply to all government ministries, departments and agencies,” Ganda said.
