By Wezzie Gausi:
The Ministry of Finance and Economic Affairs has said it will not structure the K6.1 trillion domestic debt the country has.
In an interview on Monday, Secretary to the Treasury Betchani Tchereni said authorities are in the final stages of restructuring about K7 trillion external debt.
As at the end of December 2023, the Government of Malawi had a total of K13.1 trillion public debt, of which K6.1 trillion is domestic debt and K7 trillion is external debt.
Tchereni said the government has concluded discussions with China Exim Bank, Kuwait Fund, Opec Fund and India Exim bank on debt restructuring.
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He said they have discussed terms and they will be concluding everything soon.
“It must be clarified that the government’s efforts to restructure foreign debt are at very advanced stages. We know that there has been a rumour that the government is being forced to restructure domestic debt.
“Let me be clear and clarify in no uncertain terms that the government has no plans to restructure domestic debt. It remains as it is,” Tchereni said.
Briefing reporters in Washington in April this year, International Monetary Fund (IMF) Director of African Department Abebe Aemro Selassie said the unaddressed debt situation in Malawi remains a concern. Selassie said while Malawi’s official creditors recently provided financing assurances, the countries other creditors have not done so.
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“And that is, I think, one of the most pressing impediments that we see in our ability to continue providing financing.
“Over the last couple of years, the fund, the World Bank, have provided a lot of financing to the country, but this financing cannot be effective, of course, without debt relief for the country.
“And as you noted in the context of this drought, this debt relief is extremely pressing, extremely pressing, I should say. And we hope that there will be progress on that front so that any resources we provide can go a long way to help the people of Malawi,” Selassie said.
In an interview on Sunday, IMF Resident Representative Nelnan Koumtigue said Malawi’s debt restructuring strategy is the main framework covering the discussions.
He said domestic debt is not included in the perimeters of the strategy.
“For the rest, our latest press release is publicly available and reflects the position of the fund. The mission last month was productive and discussions are ongoing to finalise the policies needed to support the completion of the ECF,” Koumtigue said.
The IMF Board of Executive Directors observed in November last year, when it granted Malawi the current $175 million Extended Credit Facility programme, that successful external debt restructuring is vital as there is no reasonable mix of adjustment and financing alone that can deliver macroeconomic stability.
