Africa-Press – Malawi. The Government of Malawi says it is closing in on a comprehensive debt restructuring deal with both commercial and bilateral creditors, a move expected to ease the country’s fiscal pressure after the collapse of the International Monetary Fund (IMF) Extended Credit Programme (ECF) earlier this year.
Williams BandaAccording to Treasury spokesperson Williams Banda, all commercial creditors have agreed to the restructuring terms, with discussions now at an advanced stage with India’s Exim Bank.
Banda also said Malawi has no active restructuring deal under the Paris Club as it only owes Belgium, which holds a small amount of debt.
“There has been tremendous progress on the debt restructuring [issue] with both commercial and bilateral lenders,” Banda said. “Government is grateful for the accelerated negotiation process.”
He added that engagements with Afreximbank and Trade and Development Bank (TDB) have been ongoing since 2022, clarifying that their loans are classified as commercial.
Banda acknowledged that delays in finalising the debt restructuring were increasing fiscal risks, with nearly half of domestic revenue in the 2025-26 national budget being allocated to debt servicing.
He warned that this limits spending on public investment and social services, raises the risk of payment arrears and slows down economic growth.
The suspension of the IMF Extended Credit Facility (ECF), which disbursed only $35 million out of the approved $175 million, has further compounded the situation.
Banda said this has affected Malawi’s ability to access concessional financing and may hurt the country’s credit rating.
He said the government was working hard to broaden the tax base and improve domestic revenue mobilisation.
Banda also cited planned reforms in procurement systems, spending controls and review of tax incentives as part of efforts to protect essential public services.
Economics Association of Malawi (Ecama) President Bertha Chikadza said the delay in debt restructuring was limiting Malawi’s ability to stabilise its economy, warning that continued pressure on revenues could lead to inflation and weaken investor confidence.
“With debt at around 86 percent of GDP [gross domestic product], a large share of government revenue is going toward debt servicing,” Chikadza said. “This leaves limited resources for social services and weakens macroeconomic stability.”
She said the lack of a clear restructuring framework and limited transparency had discouraged private and non-traditional creditors from fully engaging.
Chikadza urged the government to enhance dialogue with creditors and improve fiscal discipline to restore confidence.
Economist Velli Nyirongo said Malawi should rebase its GDP to give a more accurate picture of the economy and reduce the debt-to-GDP ratio.
He added that while the IMF programme is often seen as a benchmark for reforms, it is not always suited to Malawi’s unique challenges.
“The world is starting to realise that the IMF’s one-size-fits-all approach doesn’t work for everyone,” Nyirongo said. “What Malawi needs is a tailored recovery plan and more grants to support its short-term needs.”
Economist Marvin Banda supported the government’s shift toward restructuring and praised its preference for investment-driven borrowing over consumption borrowing.
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