{"id":67261,"date":"2025-01-28T23:32:52","date_gmt":"2025-01-28T23:32:52","guid":{"rendered":"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high"},"modified":"2025-02-09T16:01:58","modified_gmt":"2025-02-09T16:01:58","slug":"government-debt-appetite-remains-high","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high","title":{"rendered":"Government debt appetite remains high"},"content":{"rendered":"

Africa-Press – Malawi. <\/strong><\/span>Government\u2019s recent Treasury notes auction has revealed a strong appetite for government securities, with total bids exceeding K62 billion against an allotment of K38.13 billion in face value.<\/p>\n

The auction, conducted by the Reserve Bank of Malawi on January 23 2025, featured a mixed basket of instruments, ranging from two-year to 10-year tenors, including both Treasury notes and development bonds.<\/p>\n

In a notable display of investor interest, the five-year development bond attracted the highest subscription, with applications worth K20 billion, followed by the seven-year Treasury note at K14.47 billion.<\/p>\n

The government, however, maintained a conservative stance, allotting K11.25 billion and K7 billion, respectively, to these instruments.<\/p>\n

Interest rates continued their upward trajectory across tenors, with the 10-year Treasury note commanding the highest yield of 35 percent while the shorter two-year papers settled at 28.75 percent.<\/p>\n

This yield curve structure suggests persistent inflationary expectations in the medium to long term.<\/p>\n

The auction attracted a total of 15 bids across all instruments, with all bids proving successful, indicating precise pricing by market participants.<\/p>\n

The two-year development bond and 10-year Treasury note saw the highest participation, with four bids each.<\/p>\n

Bertha Chikadza<\/b>Coupon rates ranged from 10 percent for the shortest tenor to 15 percent for the longest, reflecting the government\u2019s increasing cost of borrowing across different maturities.<\/p>\n

In an interview, Economics Association of Malawi President Bertha Bangara Chikadza said risks associated with this appetite for debt are increased taxes.<\/p>\n

\u201cIncreased borrowing can cause government to increase taxes so as to manage debt repayment. This also contributes to inflationary pressures, where excessive borrowing can fuel inflation if not spent on productive sectors.<\/p>\n

\u201cThis reduces the purchasing power of Malawians and [affects] economic stability. High debt levels can also leave the economy vulnerable to external shocks such as changes in global interest rates, commodity prices. It can also deter foreign direct Investment in the country,\u201d Chikadza said.<\/p>\n

She added that to contain borrowing, government should consider strategies such as increasing domestic revenue collection through efficient tax systems, widening the tax base while reducing tax revenue leakage.<\/p>\n

\u201cGovernment can also contain borrowing through fiscal policy by prioritising essential expenditures such as healthcare, education, agriculture, etc, and any expenditures that are not essential should be re-evaluated.<\/p>\n

\u201cIn addition to that, government can invest in high growth potential\/productive sectors such as mining, infrastructure and education to stimulate economic growth,\u201d She said.<\/p>\n

In a separate interview, economist Marvin Banda said the development bond was an important domestic vehicle for catalytic interventionism in infrastructure development in Malawi.<\/p>\n

However, he was quick to say this was not the only auction and that there would be other auctions that were more recursive oriented.<\/p>\n

\u201cThe fiscal operators have recognised that the debt financing needs are stacked on the low to medium term; as such, there is considerable effort to tip the balance towards the long end of the yield curve as an effort to instil confidence in the economy as to the prospects of the future inflation and other macroeconomic fundamentals,\u201d Banda said.<\/p>\n

Ironically, during the recent pre-budget consultation meeting, Minister of Finance Simplex Chithyola Banda was optimistic.<\/p>\n

\u201cOur budget will continue to strengthen prudent fiscal management, improve domestic resource mobilisation and ensure that we achieve debt sustainability in the medium to long term,\u201d he said.<\/p>\n

For More News And Analysis About Malawi<\/span> Follow Africa-Press<\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Malawi. Government\u2019s recent Treasury notes auction has revealed a strong appetite for government securities, with total bids exceeding K62 billion against an allotment of K38.13 billion in face value. The auction, conducted by the Reserve Bank of Malawi on January 23 2025, featured a mixed basket of instruments, ranging from two-year to 10-year […]<\/p>\n","protected":false},"author":84,"featured_media":67260,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,8,12,410],"tags":[234],"class_list":["post-67261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-head-lines","category-homepage-english","category-policy","category-to-homepage","tag-malawi"],"yoast_head":"\nGovernment debt appetite remains high - Malawi<\/title>\n<meta name=\"description\" content=\"Government\u2019s recent Treasury notes auction has revealed a strong appetite for government securities, with total bids exc ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Government debt appetite remains high\" \/>\n<meta property=\"og:description\" content=\"Government\u2019s recent Treasury notes auction has revealed a strong appetite for government securities, with total bids exc ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\" \/>\n<meta property=\"og:site_name\" content=\"Malawi\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2025-01-28T23:32:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-09T16:01:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/malawi\/sites\/36\/2025\/01\/sm_1738094656.404602.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1641\" \/>\n\t<meta property=\"og:image:height\" content=\"1024\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Government debt appetite remains high\",\"datePublished\":\"2025-01-28T23:32:52+00:00\",\"dateModified\":\"2025-02-09T16:01:58+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\"},\"wordCount\":556,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/malawi\/sites\/36\/2025\/01\/sm_1738094656.404602.jpg\",\"keywords\":[\"Malawi\"],\"articleSection\":[\"all news\",\"head lines\",\"homepage-english\",\"policy\",\"to-homepage\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\",\"url\":\"https:\/\/www.africa-press.net\/malawi\/all-news\/government-debt-appetite-remains-high\",\"name\":\"Government debt appetite remains high - 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