United Nations Conference on Trade and Development (Unctad) Secretary General Rebeca Grynspan says urgent economic reforms are key to prevent the debt crisis from derailing the country’s economic progress.
In a statement following the 14th International Debt Management Conference in Geneva last week, he said presently, 3.3 billion people live in countries that spend more on debt servicing than on either health or education.
Grynspan said instead of financing essential infrastructure, education and healthcare, rising debt burdens are forcing governments into difficult trade-offs.
He said: “This forces countries to choose to default on their development to not default on their debt. No more defaults on debt, but yes on development.
“Behind us lies a system that needs reform; before us, the chance to build one that serves people and stability, long-term development, not recurring default.”
Malawi Economic Justice Network (Mejn) executive director Bertha Phiri in an interview on Thursday urged the government to enhance revenue mobilisation efforts to check rising public debt.
She said: “Almost two national budgets make up the total debt stock. The deficit is being financed by domestic borrowing so we continue to dig a pit and also taking much more resources into servicing debt.”
Minister of Finance and Economic Affairs Simplex Chithyola-Banda is on record as having said government is determined to implement fiscal consolidation and that it has reached agreements with bilateral creditors on debt restructuring.
He said: “Once the negotiations are completed, the initiative will ease the pressure on foreign exchange and provide fiscal space necessary for productive investment.
“The most ideal way of dealing with the unsustainable debt is by enhancing the country’s domestic revenue mobilisation to cover Government expenditure without recourse to further borrowing.”
UN data shows that in 2023, developing countries’ external debt hit a record $11.4 trillion, or 99 percent of their export earnings.
As at September 2024, Malawi’s public debt hit K16.2 trillion, representing 86.4 percent of gross domestic product (GDP)
Meanwhile, in the K8.07 trillion 2025/26 National Budget, interest payment is projected at K2.17 trillion, representing half of the projected domestic revenue collection of K4.4 trillion.
Of the total public debt interest, foreign debt interest is estimated at K61.2 billion while interest for domestic debt is estimated at K2.11 trillion.
