Malawi says public debt at unsustainable levels above 90% of economic output

Malawi’s finance minister said on Friday that public debt had reached unsustainable levels above 90% of gross domestic product, threatening economic stability in the donor-dependent Southern African nation. Joseph Mwanamvekha also said in an annual budget speech that the country hoped to agree a new support programme with the International Monetary Fund “in the short to medium term” as part of efforts to get public finances back on track. Malawi has been mired in an economic crisis for years, with inflation running at an annual rate above 20% since the middle of 2022.

This fiscal year’s budget deficit is projected to reach 11.9% of GDP, but the government wants to narrow it to about 9% next year, Mwanamvekha told lawmakers. Of the 23.9 trillion kwacha ($13.92 billion) public debt stock as of December last year, roughly 65% was domestic. Malawi’s government is seeking to restructure its domestic and external debt to create more fiscal space, he added, reiterating a 3.8% economic growth forecast for 2026.