K16.9 Trillion Debt Sparks Fresh Crisis Fears

As Malawians yearn for positive news amid a tough economic climate marked by soaring inflation, the World Bank has sounded the alarm on an impending debt crisis, warning of dire consequences if authorities continue their excessive borrowing.

According to a new report by the Bretton Woods institution, global debt has surged by approximately 25 percent since the COVID-19 pandemic. The report warns that, if left unchecked, this trend could trigger increased trade tariffs and tighter financial conditions for developing nations.

World Bank Chief Economist and Senior Vice President for Development Economics Indermit Gill has urged countries particularly developing economies to adopt greater fiscal discipline, cautioning that there is a 50-50 chance of a financial crisis if the current borrowing patterns persist.

Local economic and governance experts have supported the World Bank's concerns, stressing that Malawi's debt burden is becoming unsustainable.

Economics Association of Malawi (ECAMA) President, Bertha Chikadza, says post-pandemic recovery efforts have plunged countries like Malawi into debt distress. She advocates for either debt forgiveness or restructuring as viable solutions.

“Our resources are being squeezed year after year due to debt servicing. At this rate, we either need our debt forgiven or restructured so we can fund development projects. High borrowing is driving up interest rates, which undermines growth and limits future borrowing potential,” said Chikadza.

Governance expert Mavuto Bamusi urges the government to focus not just on debt relief but also on strengthening accountability and fiscal discipline.

“It is sad that sometimes we see the government borrowing for consumption, which is unsustainable. This kind of borrowing can derail progress toward the Malawi 2063 development goals. Fighting corruption and enforcing strict financial discipline are key to turning things around,” he said.

In the 2025-2026 national budget presentation, Finance Minister Simplex Chithyola Banda revealed that Malawi’s public debt has reached K16.9 trillion.

Kenphord Mdima's Avatar

Kenphord Mdima

Kenphord Mdima is a journalist, who has reported across radio, television and print since 2014. He brings stories to life with clarity, depth and purpose.

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