Malawi’s public debt has skyrocketed to K16.19 trillion as of September 2024, accounting for 86.4% of the country’s GDP. Minister of Finance Simplex Chithyola Banda revealed this while presenting the 2025/2026 national budget.
As of September 2024, external debt stood at K7.39 trillion, while domestic debt reached K8.79 trillion. The government’s reliance on borrowing to finance its expenditure has contributed to the surge in debt.
However, Chithyola Banda noted that the government has reached agreements with official bilateral creditors and is negotiating with commercial creditors to restructure debt. “Once the negotiations are completed, the initiative will ease the pressure on foreign exchange and provide fiscal space necessary for productive investment,” he said.
To tackle the growing debt, the government plans to strengthen debt and cash management, contract concessional loans, and target borrowing for priority sectors.
“To tame the growing debt, the Government has stepped up its efforts to strengthen debt and cash management. Government has and will continue to contract concessional loans, targeting borrowing to fund projects in the priority sectors, particularly leveraging on alternative and innovative financing,” he added.
Key measures include commitment controls, limiting guarantee issuance, and developing a framework to assess and manage guarantees and borrowing by state-owned enterprises.
The government has also developed the Integrated National Finance Framework to diversify resource mobilization for sustainable national development.
