Africa-Press – Malawi. Private sector mouthpiece, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI), has said Malawi’s high public debt, estimated at between 85 and 90 percent of gross domestic product (GDP), not only raises the risk of fiscal crisis but also increases borrowing costs for the government and the private sector alike.
In its reflection of the first six months of 2025, MCCCI says as the state diverts a growing portion of its budget toward debt servicing, as experienced in the current running budget, businesses face a tighter credit environment, higher interest rates and reduced access to capital.
The chamber notes that uncertainty around debt sustainability can deter both local and foreign investors who are wary of macroeconomic instability.
“In sum, the combination of slow economic growth, a widening fiscal deficit and high public debt places significant strain on Malawi’s business environment.
“Firms are facing rising operational costs, limited policy support and increased financial uncertainty, all of which undermine competitiveness, reduce investment appetite and constraining expansion,” the chamber says.
MCCCI further says businesses have struggled to source foreign currency for imports, with many turning to parallel markets where exchange rates diverge sharply from official ones.
This, the chamber says, has compounded import costs and disrupted supply chains, particularly for firms that are dependent on imported inputs.
“The imbalance between imports and exports remains a fundamental vulnerability. In the first half of 2025 alone, Malawi recorded a trade deficit of approximately $533 million,” MCCCI says.
In its statement after holding Article IV consultations with Malawian authorities last month, an International Monetary Fund (IMF) Mission observed that decisive steps were needed to restore debt sustainability.
Presenting the 2021-22 national budget to Parliament, former minister of Finance Felix Mlusu hinted at plans by the government to set up a Debt Retirement Fund whose proceeds would be ring-fenced and entirely used to retire public debt until debt levels subside to sustainable levels.
He said the fund could be turned into a Malawi Sovereign Wealth Fund which could be used for supporting economic activities and the citizenry in times of pandemics and other forms of natural disaster through bailouts and fiscal stimulus packages.
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