Finance Minister Joseph Mwanamvekha has said the government plans to borrow at lower cost, both externally and domestically, while cutting wastage to bridge the K2.85 trillion deficit in the 2026-2027 national budget.
In the budget, total expenditure has been pegged at K10.987 trillion, with total revenue and grants estimated at K8.126 trillion.
Responding to a question from Times on how he intends to fill the K2.85 trillion financial gap at a time when authorities are slowing borrowing as part of fiscal consolidation measures, Mwanamvekha said the government will prioritise cheap borrowing.
“We are also making sure that we have grants. If you have been following the Ministry of Finance, you must have observed that we are emphasizing grants rather than loans,” he said.
According to Mwanamvekha in the past a 91-day Treasury Bill was attracting 20 percent interest and a 192- day Treasury Bill was at 26 percent, but now the government is borrowing the same money at 12 percent.
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“That means our debt is getting down. So we will make sure that when borrowing the money, we borrow at cheaper rates,” Mwanamvekha said
On his part, Secretary to the Treasury Cliff Chiunda said the authorities are working hard to narrow the gap between revenue and expenditure by strengthening revenue mobilisation.
Scotland-based economist Velli Nyirongo yesterday said a deficit of K2.85 trillion, equivalent to around 9 per cent of GDP, is substantial by any standard, particularly for an economy already grappling with high public debt and constrained fiscal space.
Another economist Marvin Banda said the expectation is that borrowing pressure will remain unavoidably elevated because public debt stock stands well beyond the sustainability threshold, with a vast majority being domestic debt, which is expensive and short-term as the debt redemption profile suggests.
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According to Banda, fiscal consolidation will not be achieved if revenues underperform even if debt restructuring is achieved because in this budget, revenues are the fulcrum of fiscal consolidation.