Some experts have voiced concerns about utilisation of public debt in the country, arguing it leans more toward consumption than productive investments.
In separate interviews on Thursday, the experts argued that while debt can be a powerful tool for economic development, its effective use is crucial to avoid negative consequences.
Public resources management expert for the Parliamentary Support Programme, Dalitso Kubalasa, said borrowed funds are being spent on short-term needs such as salaries, allowances, and subsidies.
He said: “This approach fails to stimulate economic growth but instead perpetuates a vicious cycle. As a result, Malawi faces financial challenges, higher debt stress levels, and inadequate funding for essential public services.”
Kubalasa also acknowledged that cancelling domestic debt is complex and risky. Instead, he proposed debt restructuring as a viable solution.
According to him, by strengthening and reforming legal frameworks, such as the Reserve Bank of Malawi (RBM) Act, the country can better manage both foreign and domestic debt dynamics.
On his part, governance expert Mavuto Bamusi observed that rising debts are linked to the country’s import-heavy economy.
He explained that insufficient domestic production and limited exports contribute to this situation.
Said Bamusi: “The consequences are severe—a development crisis, deepening poverty, and widening inequality. To reverse this trend, urgent action is needed.”
Malawi’s debt, as a percentage of the gross domestic product (GDP), is above the 60 percent threshold recommended by global financial institutions such as the International Monetary Fund (IMF) and World Bank, who have since cautioned that the country’s debt containment strategies will not work unless the government restructures its debt held by development partners.
The World Bank is the largest creditor, with K2.2 trillion or 33 percent of Malawi’s total external public debt.
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