Stick to annual borrowing plan, experts tell Treasury

Financial and economic experts have urged government to stick to its Annual Borrowing Plan regardless of the external pressures, saying it is useful tool to attain sustainable debt levels.

The analysts said this in view of the Treasury’s Annual Borrowing Plan, which shows that government’s gross financing requirements, which are the overall new borrowing requirements plus debt maturing during the year, are estimated at K2.88 trillion, Treasury data shows.

The plan shows that domestic borrowing will be through the issuances of Treasury bills and Treasury Notes while external financing, equivalent of K288.78 billion, will consist of disbursements from new and existing loans.

Reads the plan in part: “Short-term needs are bridged using the Ways and Means facility from the Reserve Bank of Malawi.

“In accordance with the Reserve Bank of Malawi Act [2018], the total outstanding amount at any time in financial year 2023/24 will not exceed K163.28 billion and will be repaid before the end of the financial year.”

In an interview on Tuesday, Bridgepath Capital chief executive officer Emmanuel Chokani said while the plan can be a useful tool to help Malawi attain sustainable debt levels, its effectiveness will depend on the government’s commitment to transparency, strategic planning, debt sustainability analysis, market discipline and diligent implementation and monitoring.

He said: “A well-structured annual borrowing plan allows the government to align its borrowing activities with its overall fiscal and economic objectives.

“By considering factors such as debt sustainability, interest rates and repayment capacity, the government can make informed decisions regarding the timing, tenor and instruments of its borrowing.”

Economist Edward Chilima said in an interview  on Wednesday that what is more important is to stick to the plan regardless of the pressure.

“Have we put in place monitoring and evaluation mechanisms to determine any deviations?” he queried.

The plan outlines how the government’s aggregate borrowing requirements are to be met and include details on planned borrowing operations over the year, borrowing instruments to be used and the indicative timing of the borrowings.