Ministry of Finance, Economic Planning and Decentralisation says it is planning to establish a dedicated State-owned enterprise fund as mounting debt and weak repayment capacity among commercial parastatals continue to threaten fiscal stability.
The ministry’s spokesperson Williams Banda confirmed the proposal in a brief interview on Wednesday, but said discussions are still at an early stage.
The proposal comes at a time State-Owned Enterprises (SoEs) Credit Risk Assessment Report showed that 10 commercial parastatals accumulated debts exceeding K495 billion by November 2025, raising concerns over growing contingent liabilities on public finances.
According to the report, none of the assessed SOEs fell within category one or two, which represents the lowest risk levels, with 40 percent rated category three, 20 percent category four and another 40 percent category five, the highest risk category.
In an interview on Wednesday, Malawi Economic Justice Network executive director Bertha Phiri said while the proposed fund can help to improve the fiscal stability if managed properly, it would need clear governance structures, transparent management and robust reporting systems to ensure accountability.
She said consolidating SoEs debt under one structure can improve financial oversight while also giving parastatals access to cheaper financing options instead of relying heavily on commercial borrowing.
“By addressing State-owned enterprises debt, the fund can mitigate fiscal risks and promote stability,” said Phiri.
On her part, Economics Association of Malawi president Bertha Bangara Chikadza also supported the proposal, saying a centralised fund has the potential to improve transparency and accountability in the management of SOEs.
She said the fund structure could help SOEs become less reliant on government bailouts over time, allow the ring-fencing of resources towards the SOEs, improve accountability and provide a structure that protects the budget from being used for SoEs underperformance.
Bangara Chikadza, who teaches economics at University of Malawi, said: “This would, in turn, improve the performance of the SoEs through better governance and performance targets.
“For the fiscal sector, it reduces the burden on the treasury, allowing the use of resources on other social services.”
Public finance management analyst Dalitso Kubalasa said while the proposal could strengthen transparency and oversight, weak parliamentary scrutiny and limited accountability systems risk turning the initiative into “another checkpoint on a paper trail” if reforms are not implemented.
“We are already in a tight corner. Our domestic debt stock is suffocating the fiscal space,” he said.
In a separate interviw, Scotland-based Malawian economist Velli Nyirongo said unlike repeated emergency bailouts, the fund will also enable Treasury to monitor how public resources are being used and direct support to enterprises with potential to recover.
The assessment report showed that Escom Limited had the highest expected government losses, with exposure valued at K152 billion and expected losses on guaranteed and on-lent debt estimated at K98 billion.
