Malawi intends to leverage on the historic 15th summit of Brics [Brazil, Russia, India, China and South Africa] nations which South Africa is hosting to peddle its debt restructuring quest.v
Government spokesperson Moses Kunkuyu and Minister of Finance Sosten Gwengwe said in separate interviews that President Lazarus Chakwera’s attendance is an attempt to enhance debt restructuring efforts and not exploring alternative financing options.
Chakwera arrived in South Africa on Sunday, ahead of the summit, which begins today.
“For now, the government is looking for debt restructuring with some Brics members. Not so much looking for new debt. This meeting provides us with that opportunity to have top level meetings between the government of Malawi and leaders from Brics,” Kunkuyu said.
The debt restructuring strategy serves as a cornerstone for restoring debt sustainability.
Both the World Bank and the International Monetary Fund (IMF) have said success of the ongoing external debt restructuring negotiations between Malawi and its creditors would help ease the country’s debt burden.
The observation comes at a time Malawi’s public debt was seen at K7.9 trillion as at the end of December 2022.
In its 17th Malawi Economic Monitor (Mem) released recently, the World Bank said rising total public debt and debt servicing costs pushed public debt into distress.
It added that weak performance of the external sector and insufficient revenue mobilisation over many years have contributed to worsened debt vulnerabilities, already pressured by rising debt and debt servicing costs.
In an interview Monday, Malawi University of Business and Applied Sciences-based economist Betchani Tchereni said Chakwera’s presence at the summit should be looked at as an opportunity for the leadership to unlock some markets.
Chakwera has in recent months been up and about meeting various institution and government leaders to have Malawi’s debt restructured as per IMF’s recommendation for a fresh extended credit facility.
According to the Mem, public debt increased to 75.2 percent of GDP in December 2022, up from 61.5 percent of GDP in December 2021.
The Bretton Woods institution says the jump was driven by both domestic and external debt.
“The government’s recourse to mainly finance high fiscal deficits with high-cost domestic borrowing contributed to domestic debt reaching 40.8 percent of GDP in 2022, up from 30 percent in 2021.
“External debt also increased to 34.4 percent in 2022, from 31.5 percent of GDP in 2021. This was driven by conversion of short-term swaps, which were contracted for increasing liquidity, into medium-term swaps,” the bank says.
Brics is a partnership of five emerging markets and developing countries of Brazil, Russia, India, China and South Africa.
