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Malawi debt sustainability good, says World Bank

Malawi is among six countries in the sub-Saharan region that have reduced the number of years to repay their public debt, thereby increasing its debt, the World Bank has said.

In its October 2019 issue of Africa’s Pulse, the Bretton Woods institution singled out Malawi alongside Botswana, the Democratic Republic of Congo, Guinea-Bissau, Madagascar and Seychelles during the period 2013-19.

Mwanamvekha: Govt aspired to reduce domestic debt

On the other hand, 38 of the 44 sub-Saharan Africa countries, on average, have had the number of years to repay the full public debt increased by 1.5 years during the review period.

Debt sustainability is measured by the number of years it takes to repay fully the general government gross debt.

Africa Pulse has documented an increase in public debt since 2013 and the changes in the structure of debt that have rendered a riskier profile with general government gross debt exceeding 60 percent of the gross domestic product (GDP) for 15 of the 45  countries in sub-Saharan Africa in 2018.

Reads the report in part: “Improving debt management and sustainability in the region will require enhancing tax administration and collection that maximises the existing structure.

“Reducing informality in Africa will help increase government revenues by expanding the tax base.”

Reserve Bank of Malawi (RBM) figures show that the stock of domestic debt as at the end December 2018 stood at K1.7 trillion or 32.3 percent of GDP while foreign debt (external debt) stood at K1.6 trillion, pushing the public debt stock to K3.3 trillion which is 65 percent of GDP.

Catholic University dean of social sciences Gilbert Kachamba said on Friday that while this paints a good outlook  in the face of the increased public debt, Treasury should desist from borrowing for consumption.

Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said in his 2019/20 National Budget Statement last month that Malawi aspires to reduce domestic debt to 20 percent of GDP by 2023.

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