Actionaid for shift in economic policy
Malawi’s current debt crisis and increasing poverty levels are a result of failed market- oriented economic policies and political elitism, a women-led coalition supported by ActionAid Malawi has said.
The assertion comes against the background of Ministry of Finance and Economic Affairs data showing that Malawi’s public debt reached K13.1 trillion as of December 2023, which is 85 percent of the gross domestic product (GDP). External debt is pegged at K7 trillion while domestic debt was at K6.1 trillion.
Speaking yesterday in Lilongwe during the launch of the organisation’s strategic plan, ActionAid Malawi policy coordinator Tusayiwe Sikwese called for a shift to people-centred economic policies.
She said: “The neo-liberal economic system has not worked for Malawi for the past 50 years.
“One of the reports that talks about that is the ‘50 years of failure’ which shows serious funding gaps in social sectors that ought to improve people’s livelihoods.”
Sikwese said this is a result of policies that generate debt accumulation to the point that the country has to spend much of its revenue on servicing the debt.
She said the current system works for political elites who are the ultimate beneficiaries at the expense of the ordinary Malawians burdened with taxes while being denied good public services.
The tight fiscal space causes women to bear the burden because culturally, they have to fend for children at home and play a key role in the social sector, according to Sikwese.
On her part, For Equality economic justice and rights officer Joan Ching’amba called for gender-sensitive economic policies that empower women and girls to reverse the poverty trend.
She also called for debt cancellation to create fiscal space that can increase social spending and favourable taxation.
Ching’amba said currently, with support from ActionAid, they are mobilising women on awareness on fiscal and economic policies to push for policies that are responsive to the needs of the vulnerable groups in the country.
In its ‘Malawi Economic Monitor’ released in July, the World Bank said the country’s public-debt-to-GDP ratio is now at 91.3 percent from 81.3 percent in 2023.
The Bretton Woods institution observed that Malawi’s debt sustainability hinges on successful restructuring and fiscal adjustment.
Reads the report in part: “The fiscal deficit reached 12.4 percent of GDP in 2023/24 fiscal year, necessitating large-scale domestic and external borrowing while the depreciation of the kwacha added approximately K2 trillion to the debt stock.”
The latest World Bank Debt Sustainability Analysis confirms that Malawi’s debt restructuring strategy, if fully implemented alongside a successful fiscal consolidation under the International Monetary Fund programme and complemented by increased grant financing, could restore debt sustainability over the medium-term.
Secretary to the Treasury Betchani Tchereni conceded in an earlier interview that failure by foreign lenders to restructure their debt with Malawi could make the country default.
He said new loans are only highly concessional to minimise worsening the debt stress.
