Net credit to central government from commercial banks grew by 16.9 percent or K124.1 billion to K857.3 billion in January 2021, the Reserve Bank of Malawi (RBM0 figures show.
In its January 2021 Monthly Economic Report, RBM attributed the increase in commercial banks’ uptake of Treasury notes and Treasury bills by K91.7 billion and K30.7 billion respectively.
Reads the report in part: “In addition, drawdown of government deposits in the commercial banks amounting to K1.7 billion further reinforced the increase in net credit to government.
“Similarly, credit to State-owned enterprises increased by K7.9 billion to K67.6 billion.”
However, net credit to central government from monetary authorities decreased by K72.4 billion to K361.1 billion following net repayment of ways and means advances of K111.1 billion and accumulation of government deposits by K23.9 billion in the review month.
The report further shows that holding of Treasury notes by monetary authorities increased by K62.6 billion, counteracting the decline in net credit to government.
Credit to the private sector, on the other hand, recorded an annual growth of 15.6 percent during the review period, a marginal improvement from a growth of 15.2 percent registered in December 2020.
On a month-on-month basis, private sector credit increased, albeit marginally by K1.6 billion or 1.2 percent compared to contractions of K8 billion or 1.2 percent in December 2020 and K527 million or 0.1 percent in January 2020.
In particular, individual and household loans increased by K11.3 billion while commercial and industrial loans, foreign currency denominated loans and mortgages recorded net repayments of K4.8 billion, K1.3 billion and K918.9 million, respectively.
In its April 2021 Economic and Fiscal Policy Statement, Ministry of Finance said in the medium-term, government will focus on easing the interest burden to allow for more fiscal space for government to spend on other social and productive sectors without recourse to additional borrowing.
Centre for Social Concern economics governance officer Benard Mphepo said reducing unnecessary expenditure is key to fiscal prudence.