Sustainability of external debt on Malawi’s import cover – Considerations for Malawi’s Vision 2063

Phiri Kampanje, Brian (2022): Sustainability of external debt on Malawi’s import cover – Considerations for Malawi’s Vision 2063.

Abstract

Malawi is currently relying on external debt to cushion its forex reserves and support country’s import cover. This is unsustainable in medium to long-term and World Bank has already expressed concerns on this matter. Malawi’s debt stress levels are currently at high levels but the country is expected to borrow heavily from external sources to support bankable and flagship projects running from 2021 through 2030 under MIP-1 which is a ten-year medium strategy of Malawi’s Vision 2063. There is need to find reasonable export strategies to boost export proceeds but at the same time reduce massive illegal externalisation of forex to give MIP-1 a better chance of success.

• Item Type: MPRA Paper
• Language: English
• Keywords: External; Debt; Malawi; Forex
• Subjects: H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit ; Surplus; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O29 - Other; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P35 - Public Economics

References

Government of Malawi (2021a) Malawi 2063 First 10-Year Implementation Plan (MIP-1), National Planning Commission, Lilongwe, Malawi

Government of Malawi (2021b) Mid Year Public Debt Report for 2020/2021 Financial Year

Kumwembe, William. (2022) “Imports appetite threat to forex”, Times Online, 15th June 2022 accessed at https://times.mw/imports-appetite-threat-to-forex/

Malawi In Figures (2020), National Statistics Office, Malawi.

Mzale, Dumbani. (2021) “Import cover revised to $250 million”, Nation Online, 21st July 2021 accessed at https://www.mwnation.com/monthly-import-cover-revised-to-250-million/

National Export Strategy II (2021), Ministry of Trade, Malawi. Public Finance Management Act (2022)

Reserve Bank of Malawi Act (2019)

Reserve Bank of Malawi (2021) Financial and Economic Review, Vol. 55, No. 4

Trade Statistics Brief Release (2020), National Statistics Office, Malawi.

World Bank (2022) “Strengthening Fiscal Resilience and Service Delivery”, Malawi Economic Monitor, 15th Edition, 15th June 2002.

World Bank (2018) Malawi - Systematic Country Diagnostic: Breaking the Cycle of Low Growth and Slow Poverty Reduction, Report No. 132785