By Suleman Chitera
Minister of Finance and Economic Affairs Joseph Mwanamvekha says government will begin buying back part of its domestic debt as part of efforts to reduce Malawi’s public debt, which has now exceeded K22 trillion.
Mwanamvekha made the remarks during the launch of the latest Malawi Economic Monitor by the World Bank, where he outlined measures aimed at stabilizing the country’s fiscal position.
He said government is already limiting new borrowing and will complement this by repurchasing some of its outstanding Treasury bills and bonds from financial institutions before they mature.
Debt buyback is a fiscal management tool in which government retires part of its outstanding securities early. By doing so, it reduces the overall debt stock and limits future interest payments associated with those instruments.
Mwanamvekha indicated that rising debt levels have placed significant pressure on public finances, with debt servicing consuming a large share of government revenue.
“Our focus is on reducing borrowing, and buying back some of the debt is one of the practical ways to manage the rising debt levels,” he said.
Malawi’s domestic debt, much of it held by commercial banks and institutional investors, has grown in recent years amid persistent fiscal deficits and economic challenges. The high interest rates attached to domestic borrowing have further escalated the cost of servicing the debt.
Economists say a successful buyback programme could ease pressure on government finances and improve liquidity management in the financial market. However, they caution that sustained fiscal discipline, improved revenue collection and prudent expenditure management will be critical to ensuring long-term debt sustainability.
The Malawi Economic Monitor, published periodically by the World Bank, assesses the country’s economic performance and offers policy recommendations aimed at strengthening macroeconomic stability.
Government faces the challenge of reducing its debt burden while maintaining essential public services and supporting economic recovery in the face of forex shortages and inflationary pressures.
Mwanamvekha maintained that authorities are committed to restoring fiscal stability and preventing further escalation of the debt stock.
