Secretary to the Treasury Ben Botolo has advised countries in Eastern and Southern Africa to adopt best practices for public debt management to enhance resilience to external shocks.
Speaking during the opening of the joint Macro Economic and Financial Management Institute of eastern and southern Africa (Mefmi)/World Bank Regional Workshop in Lilongwe yesterday, he said the meeting has come at an opportune time when public debt management is on the spotlight.
Said Botolo: “The development financing landscape has evolved tremendously over the past decade and this poses numerous challenges for policymakers in developing countries, including those in the Mefmi region.
“There has been a significant decline in foreign grants and concessional loans over the past decade from developed countries.
“However, the financing needs of our countries are significant, especially because governments have obligations to implement poverty reduction programmes.”
He said governments in Mefmi region have increased borrowing from emerging creditors and in the international capital market to meet shortfalls, leading to rapid accumulation of external debt in recent years.
For example, Treasury figures show that the country’s external debt has increased from $452 million (K331 billion) in 2006 to $2.02 billion (K1.4 trillion) in 2017, which has increased the costs and risks of borrowing.
“The situation is the same in most low-income countries that received debt relief under the Heavily Indebted Poor Countries [Hipc] initiative and the Multilateral Debt Relief Initiative [MDRI],” said Botolo.
World Bank senior debt specialist Lilia Razlog said the joint management performance assessment workshop will help equip participants with sound debt management skills.
“It is good for experts from different countries to meet and share experiences. The issue of debt management is crucial and is at the core of any government.
“It helps governments to fund their short-term and long-term financial needs,” she said.
Razlog urged Mefmi members to borrow wisely and use the resources prudently to avoid debt accumulation.