Treasury continues to borrow on the domestic market, with figures showing that borrowing increased by K126.5 billion in March, a situation that continues to swell domestic debt.
In February, Reserve Bank of Malawi (RBM) figures show that borrowing increased by K15.6 billion while in January, it rose by K124.1 billion.
The figures contained in the latest RBM March Economic Review Report show that net credit to the central government from commercial banks jumped by K66.6 billion to K916.3 billion in March.
The increase in claims on the public sector reflected borrowing from both commercial banks and the monetary authorities.
Reads the report in part: “The upsurge was explained by commercial banks’ uptake of K37 billion Treasury notes, which was reinforced by a drawdown of K29.2 billion government deposits.
“During the same period, the stock of outstanding credit to State-owned enterprises increased by K2.7 billion to K71.3 billion.”
From the monetary authorities, government’s net outstanding credit grew by K59.8 billion to K371.7 billion during the review due to the drawdown of government deposits amounting to K54.9 billion, which was reinforced by uptake of K5 billion ways and means advances.
Currently, Treasury figures show that Malawi’s debt stock has been on the rise, hitting a record K4.76 trillion by December 2020, which is double the value of the revised 2020/21 fiscal plan pegged at K2.3 trillion.
The increase in debt stock from the K4.13 trillion recorded in June last year means that public debt has been rising by K630 billion on a monthly basis.
Out of the K4.76 trillion public debt stock, domestic stock alone accounts for K2.72 trillion or 31 percent of the country’s nominal gross domestic product (GDP) pegged at K8.1 trillion.
Projections by the International Monetary Fund indicate that Malawi’s debt stock will likely hit 78 percent of the country’s total wealth this year.
Associate professor of economics at the Malawi University of Business and Applied Sciences Betchani Tchereni, said public debt has become dangerous for the macroeconomic environment.
“Government business should not be crippled, but borrowing in this manner is worrying and concerning,” he said.
On his part, Chancellor College economics professor Ben Kaluwa described government’s borrowing appetite a cause for concern.
“We are not sure of the purpose of this kind of borrowing but one can only speculate that it is to fund Covid-19 expenditure,” he said.