Govt confirms that the K12.56tn public debt is unsustainable

Finance and Economic Affairs Minister, Simplex Chithyola Banda, has reiterated that Malawi’s public debt of MK12.56 trillion, exacerbated by the exchange rate realignment, is unsustainable.

The government, however, has been working to sustain the debt through, among others, fiscal adjustment and debt restructuring negotiations with its bilateral and commercial creditors, according to Chithyola Banda.

He said this when he presented the 2024/2025 national budget statement in Parliament on Friday.

The minister said the government remains optimistic that the talks with its bilateral and commercial creditors will yield the desired results.

According to Chithyola Banda, the MK12.56 trillion public debt represents 84.8 percent of GDP. Total external debt is K6.62 trillion while domestic debt is K5.94 trillion.

Banda further said that government is aware of the risks posed by contingent liabilities that lead to the growth of debt such as guarantees.

“The government is, therefore, developing a framework for managing contingent liabilities. This would ensure that decisions to issue guarantees are made with a sound analytical underpinning,” he said.

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