Public debt worries World Bank


By Taonga Sabola

The World Bank has said it is worried with Malawi’s growing budget deficit, which is worsening the already dire public debt stock currently hovering at K5.5 trillion or 59 percent of the GDP.

World Bank Country Manager, Hugh Riddell, disclosed this in Lilongwe during the dissemination of the 14th Edition of the Malawi Economic Monitor (Mem): Addressing Macro and Gender Imbalances.


Riddell said the country’s budget deficit has been on the rise due to over optimistic revenue projections,

“An increasing domestic debt burden has been further worsened by significant commercial borrowing to support the exchange rate, which has further increased debt vulnerabilities.

“This is what we mean by imbalances – and it is a situation in which shocks are both more likely and harder to mitigate,” Ridell said.


The bank says the government must, therefore, act decisively to address mounting macroeconomic challenges, especially on the accumulation of domestic and external debt.

This, the bank says, calls for hard decisions in the upcoming 2022/23 budget, including on the Affordable Inputs Programme (AIP) and containment of expenditure on wages and goods and services, improving public financial management systems to make optimal use of limited resources, as well as strengthening oversight of state-owned enterprises.

World Bank has also underscored the need to strengthen the oversight of key state-owned enterprises to reduce wasteful spending.

“Reallocate resources to support the most vulnerable through well-targeted and efficient social safety nets.

“And of course, we stress the short term urgency to continue to accelerate vaccine access for all – helping to create a more resilient economy and a healthier, more productive population,” Riddell said.

Finance Minister Felix Mlusu, said the government is equally worried with the growing public debt but it is doing everything possible to reduce it.

Among others, Mlusu said the government will in the next budget ensure that it only spends on priority areas.

“Most of the public debt we inherited from the previous regime. We are aware that the debt has been growing because our domestic resources are not enough to finance the needs. That is why recently we launched the Domestic Revenue Mobilisation Strategy aimed at boosting revenue mobilisation which will help reduce the budget deficit.

“Again we want to ensure the operationalisation of the Debt Retirement Fund,” Mlusu said.



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