Ministry of Finance, Economic Planning and Development says it is hopeful of escaping the weight of unsustainable debt through the newly launched United Nations (UN)-backed Sevilla Forum on Debt.
Launched on Wednesday in Spain, the forum seeks to promote fairer lending, faster debt restructuring, help to lower borrowing costs, enable timely and equitable debt restructuring and strengthen transparency and accountability.
Speaking in an interview yesterday, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said through the forum, government will lobby with creditors, especially on debt restructuring.
He said: “This is important for us to be getting guidance and independent advice on debt and also lobbying on behalf of government and our creditors to see whether they can help us restructure debt.”
Currently, International Monetary Fund data show that Malawi remains in arrears to its external commercial creditors in excess of $669 million (about K1.2 trillion) by 2024 with the country’s external and overall public debt in distress consistent with the findings of the previous November 2023 Debt Sustainability Analysis.
It also comes at a time the Debt Relief for Green and Inclusive Recovery reported that Malawi, alongside 14 other African economies, had breached solvency thresholds on its external debt.
In a separate interview yesterday, African Institute for Development Policy executive director Eliya Msiyaphazi Zulu observed that Malawi’s debt crisis requires urgent attention, adding tht the Sevilla Forum would help to unlock resources for education and healthcare, which are vital to develop quality human capital to drive the Malawi 2063, the country’s long-term development plan.
He said: “The 2006 debt cancellation, which significantly reduced our debt burden from 71 percent to 18 percent of the gross domestic product, shows that the impact of such initiatives can be short-lived.
“Further, the fact that about 55
also means the overall impact of the external debt relief will be limited. To truly benefit from debt relief, Malawi needs comprehensive reforms to tackle corruption, fiscal indiscipline and improve overall economic productivity and management of associated products.”
On her part, Malawi Economic Justice Network executive director Bertha Phiri said the initiative will help developing countries such as Malawi to channel public finance to areas of greatest need supporting development goals through its action plan.
She said among others, Malawi could benefit from efforts to recover illicit financial flows, strengthened domestic resource mobilisation and integrated national financing frameworks to align with sustainable development goals.
Under the new framework, countries will work to develop shared principles for responsible borrowing and lending, strengthen crisis-prevention mechanisms and explore reform of the global debt architecture.
UN Under-Secretary- General Li Junhua is quoted as having said that “the ultimate test lies in implementing the full package of debt actions.”
The new forum is one of the outcomes of the Fourth International Conference on Financing for Development and was launched as an initiative under the Sevilla Platform for Action.
The Seville process reflects growing concern that soaring debt, which has left developing economies, including Malawi, forced to spend more on repayments, is derailing progress toward the Sustainable Development Goals.
Hosted by Spain and supported by the UN, the forum is designed to keep global attention on the debt crisis while converting firm commitments made at June’s Fourth International Conference on Financing for Development in Seville into concrete action.
The Sevilla Forum is a Spanish-led initiative to create an open, inclusive platform for dialogue and action on global debt challenges.
Ministry of Finance, Economic Planning and Development data show that as at September 2024, total public debt stock was at K16.19 trillion or 86.4 percent gross domestic product, with external debt recorded at $4.27 billion (about K7.4 trillion) and domestic debt at $5 billion (about K8.79 trillion
