Business NewsFront Page

Malawi intesifyies debt cancellation lobby

Vice-President Saulos Chilima says total debt cancellation would help Malawi and other Least Developed Countries (LCDs) to get back on the track towards the achievement of Sustainable Development Goals (SDGs).

He said this on Monday during a panel discussion called ‘Aligning the Global Debt Architecture with the Sustainable Development Goals’ at the ongoing United Nations (UN) Economic and Social Council Summit in the United States of America.

Chilima (C) makes his submission at the UN Economic and Social Council Summit

Chilima said the Covid-19 pandemic and the war in Ukraine have resulted in a good part of the UN membership crushing into a debt crisis which is not going to vanish on its own if the countries, especially LDCs, continue shouldering huge debts that are attached to high interest rates.

He said: “The debt burden in most LDCs, including Malawi, has reached pre-Highly Indebted Poor Countries levels, averaging 57 percent of the gross domestic product [GDP] in 2021 and debt service obligations accounting for a higher proportion of domestic revenues.”

The Veep added that debt distress hamper countries, especially low-income economies from investing in sustainable development, saying there is need to ensure that that commitments match action if the world is to achieve inclusive development in this last decade of action.

According to the United Nations, currently three in four LDCs have already fallen into debt distress.

Treasury figures show that as at December 31 2021, total public debt stock stood at K5.8 trillion or 56.8 percent of rebased GDP, as compared to a stock of K5.45 trillion, or 58.8 percent of GDP, in June 2021.

This equates to an increase of 7.1 percent in absolute terms, but a decrease of two percentage points as a ratio of GDP.

The end December 2021 total public debt stock comprised K2.8 trillion (27.3 percent of GDP) external debt and K3.04 trillion (29.5 percent of GDP) domestic debt.

In September last year, President Lazarus Chakwera’s administration—alarmed at the public debt levels it inherited and worried about projected upward trend in the medium-term—pushed for a four-pronged strategy to bring down the crippling loans to manageable levels.

According to information from Treasury, the President approved a plan that includes returning to multilateral and bilateral creditors to negotiate debt relief.

The plan also hinges on boosting domestic revenue through the Malawi Revenue Authority tax collection efforts as well as fees and levies from ministries, departments and agencies.

In his maiden address to the United Nations General Assembly made virtually on September 24 2020, Chakwera also appealed to world leaders to cancel LDCs debts, including Malawi.

His justification was that the LDCs were faced with challenges requiring collective effort, worsened by the impact of the Covid-19 pandemic. Besides seeking debt relief, the President also pleaded for an extension of the moratorium on debt repayment to help the LDCs recover from the negative impact of Covid-19 in a sustainable manner.

Speaking before the Veep, Grenada Prime Minister Keith Claudius Mitchell highlighted the need for identification of a safe methodology of clearing out debt for low-income economies while maintaining the world’s ability to sustainably invest in the future.

Related Articles

Back to top button