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Public debt at K1.8 trillion

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Malawi’s public debt was recorded at K1.8 trillion at the end of the fourth quarter of 2016, down from K2 trillion in the third quarter, the Reserve Bank of Malawi has said.

The public debt is about 139 percent of the K1.29 billion 2017/2018 national budget presented by Finance Minister Goodall Gondwe early this month.

According to a report from RBM for the fourth quarter of 2016 released on Monday, of the total debt, K1.1 trillion was external debt stock at 28.9 percent of Gross Domestic Product (GDP), a drop from 33.2 percent of GDP realised at the end of the third quarter 2016.

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Domestic debt stock registered a drop from K757 billion recorded at the end of the previous quarter to K724 billion.

It thus similarly registered a decrease in domestic debt stock to GDP ratio from 19.8 percent in the last quarter of 2016 to 19 percent in the quarter under review.

“The decline was mainly attributed to a reduction in RBM holdings of Treasury bills from k37.9 billion at the end of the third quarter to K21.7 billion in the quarter under review.

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“Holding of promissory notes also reduced to K33.1 billion in the review quarter from K34.4 billion in third quarter,” RBM said.

In terms of distribution of debt by type, Treasury notes were the highest and accounted for 55.0 percent while Treasury bills constituted 35.3 percent of total domestic stock.

In terms of domestic debt by holder, RBM continued to hold the lion’s share of total domestic debt stock at 61.3 percent.

The bank’s domestic debt holding has been on the rise since the second quarter of 2015, largely reflecting increased government borrowing from the central bank during the reviewed quarter.

“Commercial bank’s holding of domestic debt decreased from 20.2 percent held in the second quarter to 18.4 percent in the quarter under review.

“Insurance companies, pension funds, other financial institutions and corporate sector held 11.7 percent, 5.8 percent, 3.0 percent and 2.1 percent of the total domestic debt stock, respectively,” said RBM.

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