LILONGWE (Mabvuto Banda, Reuters) — Malawi’s domestic debt is likely to more than quadruple in the next financial year as the government tries to cover falling public revenues, the finance minister has said.
Goodall Gondwe told parliament the government planned to borrow 176-billion kwacha ($246m) in the financial year starting in July, up from 30.7-billion kwacha in 2017-18.
Government revenues have been hit by a 45-billion kwacha bailout of state-run Agricultural Development and Marketing Corporation, as well as low revenue collection and the failure to receive 55-billion kwacha in grants from donors, he said.
Western donors have suspended aid to Malawi over graft allegations.
“We need to increase revenue collection and control expenditure so that our debt does not become unsustainable,” Gondwe told Reuters. However, he said current debt levels were still manageable with external debt at 23% of GDP against the 30% recommended for low-income countries.
“We plan to borrow from commercial banks; also, the central bank will issue treasury bills for the same purpose,” Gondwe said.
According to treasury data, as of December 2017, Malawi’s public debt stood at 2.4-trillion kwacha, made up of 1.4-trillion kwacha in external debt and 1.2-trillion in domestic debt.