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The dynamics of public debt in Malawi: A review

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  • Saungweme, Talknice
  • Odhiambo, Nicholas M

Abstract

This study provides an exploratory review of Malawi's government debt, how it has impeded development and suggests potential solutions. The study examines the size, composition, and structure of Malawi's public debt stock from 1970 to 2020 by analysing the sources of government debt, emphasizing the institutional changes and legislative frameworks put in place to support responsible public spending and debt management. The study was aided by the analysis of data on public debt, both domestic and foreign, from a number of organisations, including the World Bank, the International Monetary Fund, and the Government of Malawi. The review discovered three main time periods of debt patterns in Malawi: 1970?2006, 2007?2012, and 2013?2020. One of the challenges faced by Malawi is the higher-than-expected primary deficits, which are primarily covered by expensive domestic debt taken out at higher interest rates. This is because the country's economy and income base have not expanded quickly enough to meet the rising government spending needs, such as those associated with covid-19 and the high cost of public employment. The study suggests that fiscal consolidation be further strengthened to guarantee that government debt remains within sustainable limits and does not crowd out the private sector. This will strengthen the currently in place debt management mechanisms.

Suggested Citation

  • Saungweme, Talknice & Odhiambo, Nicholas M, 2022. "The dynamics of public debt in Malawi: A review," Working Papers 29829, University of South Africa, Department of Economics.
    • Handle: RePEc:uza:wpaper:29829
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    File URL: http://uir.unisa.ac.za/bitstream/handle/10500/29829/23.%20THE%20DYNAMICS%20OF%20PUBLIC%20DEBT%20IN%20MALAWI%20A%20REVIEW.pdf
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    References listed on IDEAS

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    1. World Bank, 2013. "Malawi Public Expenditure Review," World Bank Publications - Reports 20586, The World Bank Group.
    2. International Monetary Fund, 2006. "Malawi; Debt Relief at the Heavily Indebted Poor Countries Initiative Completion Point and Under the Multilateral Debt Relief Initiative," IMF Staff Country Reports 06/420, International Monetary Fund.
    3. International Monetary Fund, 2006. "Malawi: Debt Relief at the Heavily Indebted Poor Countries Initiative Completion Point and Under the Multilateral Debt Relief Initiative," IMF Staff Country Reports 2006/420, International Monetary Fund.
    4. World Bank, 2003. "Malawi : Country Financial Accountability Assessment," World Bank Publications - Reports 14342, The World Bank Group.
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