The Reserve Bank of Malawi (RBM) has rejected all bids, totaling K83.05 billion, submitted during the Treasury bills auction held on January 27, raising zero Kwacha as the government intensifies fiscal consolidation.
The central bank turned down K26.3 billion in 91-day bills, K19 billion in 182-day bills and K37.8 billion in 364-day bills despite strong demand.
This marks a shift in borrowing strategy as the authorities seek to reduce debt servicing costs, which are consuming over K2 trillion annually.
Financial Market Dealers Association President Leslie Fatch described the move as a “statement of intent” aligned with the government’s target of reducing the policy rate to 12 percent by 2028.
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“They keep saying the government is bleeding on repayments; so, they want to drop the rates. Bids were being submitted but RBM is choosing not to take them,” Fatch said.
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Economist Marvin Banda pointed out that demand remained robust, with the 91-day yield dropping from 16 percent to 15 percent due to market forces rather than reduced investor appetite.
He also said domestic debt restructuring faced significant challenges, particularly with financial institutions having foreign shareholders and complex governance structures.
“The government simply chose not to borrow. Demand is there and will always be there,” Banda said.
Previous yields stood at 15 percent for 91-day bills, 20 percent for 182-day bills and 26 percent for 364-day bills.
