It has taken Malawi a while to get on the road to recovery, after a devastating cyclone wreaked havoc on the country in 2019 and effects of the following COVID19 pandemic. But as part of recovery efforts, Malawi has rebased its nominal GDP which now stands at 8.2 trillion kwacha, approximately 10.9 billion dollars. The country also intends to raise 1.2 billion kwacha in domestic revenue, mainly through taxes and levies. At the opening of the 2022/23 national budget meeting early in February, said that the economic recovery measures being implemented from government’s socio-economic reform plan will help the country’s GDP grow by 4.1% in this fiscal year. To wrap up the week on Business Edge, Tolulope Adeleru-Balogun is joined by Hubert Patrick Nanthambwe, Malawian development economist based in Kenya , and they review Malawi’s 2022 budget which focuses on growth.
“Malawi’s economy has been doing good, especially since 2016,” says . “But after 2019, the effects of the coronavirus pandemic and the cyclone were experienced in 2020 and 2021.” These effects were most apparent in the shrinking of Malawi’s economy to 0.8%. Similarly, before 2019 the welfare of Malawian citizens was on the rise at 1.8% increase in the per capita GDP, which was essentially wiped out the following year. To make up for this difference, the government embarked on heavy borrowing to fill the gap. The 2022/23 budget appears to have all of these into consideration as it includes 11.1 billion kwacha in social cash transfer scheme meant to support a section of the populace the government calls “ultra-poor”, as well as development expenditure pegged at 820 billion kwacha.
Nevertheless, Malawi’s debt is a cause for concern as it embarks on this economic recovery and growth process. To make up for the deficit in its budget, the government of Malawi plans to finance it through foreign borrowing to the tune of 237 billion kwacha. Hubert Patrick Nanthambwe says “Just like many other African countries, Malawi is heavily indebted: its debt profile is currently about 8 trillion kwacha (452 billion dollars). To ensure that the country’s progress is not delayed, it will restructure its domestic debts towards a longer maturation period.
Watch Business Edge in full above.