DPP, NAP caution government on “insensitive” borrowing as debt hits MK15.1tn

The opposition Democratic Progressive Party (DPP) and National Advocacy Platform (NAP) have cautioned the Malawi Congress Party (MCP)-led administration against “insensitive borrowing”, fearing this will have “very serious repercussions” on future generations.

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The sentiments follow revelations that Malawi’s debts have increased by four times since President Dr. Lazarus McCarthy Chakwera took over power in June 2020.

During the DPP administration, the debt stood at K4.1 trillion.

DPP vice president for North, Jappie Mhango, warned on Friday that the rapid and unsustainable debt growth poses a serious threat to the country’s economic stability and future development.

“The debt that has ballooned in the past four years is unsustainable and emanates from careless spending by government. What is worrisome is that future generations are going to pay for the sins that this government has committed,” said Mhango.

On their part, NAP chairperson Benedicto Kondowe and his National Coordinator, Baxton Nkhoma, said they were deeply alarmed by the unprecedented surge in Malawi’s public debt, which has skyrocketed by K2.54 trillion in the first six months of 2024 alone, bringing the total to an overwhelming K15.1 trillion.

Kondowe and Nkhoma, in a statement issued on Wednesday, said the escalating public debt crisis is an urgent and dire threat to Malawi’s future.

“As debt surges to unprecedented levels, it is devouring a significant portion of the national budget, crippling the government’s ability to fund vital development projects for the country’s most vulnerable citizens. Rising debt brings soaring interest payments that divert essential funds from crucial public services like education, healthcare, and infrastructure, endangering current progress and imposing a stifling legacy of debt on future generations. This crisis is also crowding out private sector investment, as government borrowing absorbs scarce financial resources, stifling economic growth, job creation, and overall national advancement. The severity of this situation demands immediate and decisive action to prevent further economic decay and secure a prosperous future for all Malawians,” reads the statement in part.

“A critical challenge we face is the severe difficulty of boosting revenue amid a constrained fiscal environment. Hostile economic conditions and an unfriendly business climate are hampering the Malawi Revenue Authority’s (MRA) ability to collect the necessary funds to meet national financial needs. The unregulated growth of the informal sector only exacerbates this problem, creating inefficiencies in revenue collection and forcing the government into an unsustainable reliance on debt,” it adds.

Kondowe and Nkhoma further stated that they were equally alarmed by the tendency by parliament to approve loan bills without rigorous scrutiny has significantly contributed to the current debt turmoil.

The duo said Malawians need a parliament that is vigilant, responsive, and proactive—one that prioritizes the long-term prosperity of Malawians over short-term gains and resists financial inducements that compromise the future of our nation.

“The urgency for reform in this regard cannot be overstated. The gravity of Malawi’s debt crisis demands immediate and decisive action. While borrowing might be necessary at times, it must be balanced with stringent measures to ensure debt sustainability and prudent fiscal management,” they said.

Meanwhile, Kondowe and Nkhoma have recommended that the government should conduct a comprehensive audit of debt contraction, evaluating debt volume, purposes, and deliverables to ensure transparency, accountability, and effectiveness.