The RBM has attributed the continued surge to the issuance of K3.8 billion Treasury Bills (TBs) securities which was also reinforced by governmentâ€™s drawing down of K594.2 million of its deposits with the bankers.
This is a clear indication that government is heavily borrowing from the market to finance some of its activities as a result of a huge hole left in the 2011/12 budget in which donors are still withholding budgetary support.
In the December 2011 economic review, the central bank said the debt went up by K4.5 billion to hit K30.2 billion from the previous monthâ€™s K25.7 billion.
At the same time, the figures show that net domestic credit extended by the banking system was affected and dropped by K4.6 billion to K287.8 billion in December 2011 from K292.4 billion the month before.
â€œOf the total decrease, K11.1 billion was explained by net credit to government whereas net credit to the parastatals accounted for K305.5 million,â€ reads the review in part.
However, the commercial bankâ€™s extension of credit to the private sector rose by K6.8 billion to K140.7 billion in the month under review from the preceding monthâ€™s position of K134 billion.
The growth in credit was largely influenced by the demand for financing of farm inputs expected at the onset of the agricultural season.
Breaking down of the sectoral distribution, the RBM review said the commercial and industrial sector received the largest portion of the available resources at K4.7 billion, trailed by the agricultural sector at K695.4 million.
Foreign currency denominated loans amounted to K307.1 million, personal loans K278.7 million and mortgage loans contributed K172.7 million, according to the bank.
The review, which has commented on a wide range of economic issues, said the Malawi kwacha appreciated against all currencies of its major trading partners except South Africa rand.
â€œThe appreciation of the kwacha was partly explained by the strong performance of the US dollar against other major currencies. The US economy is expected to improve in 2012; hence, the strengthening of the dollar,â€ said the RBM.