CeGED describes 2025/2026 national budget as inadequate
Nyirongo: The budget may show improvements in revenue mobilization and sectoral allocations, but it still fails to address debt sustainability and foreign exchange shortages adequately
The Centre for Green Economy in Developing Countries (CeGED) has described Malawi’s proposed K8.05 trillion 2025/26 national budget as inadequate in addressing critical issues of debt sustainability.
CeGED Global Lead, Vellie Nyirongo, expressed concern over Malawi’s high debt burden, noting that the country’s debt-to-GDP ratio stands at 86.4%, translating to K16.19 trillion as of September, 2024.
Nyirongo highlighted that interest payments alone will absorb nearly half of domestic revenue, limiting fiscal space for essential development projects.
Finance Minister Simplex Chithyola Banda, in his budget presentation, disclosed that K2.17 trillion equivalent to 49.2% of domestic revenue has been allocated to interest payments on debt.
He stressed that the government is pursuing fiscal consolidation and debt restructuring, having secured agreements with bilateral creditors and continuing negotiations with commercial lenders.
Nyirongo pointed out that high levels of domestic borrowing could crowd out private sector investments and increase inflationary pressures.
“The budget may show improvements in revenue mobilization and sectoral allocations, but it still fails to address debt sustainability and foreign exchange shortages adequately,” – Nyirongo said.
He further stated that while the government aims for ambitious economic growth and inflation targets, “these objectives are at risk due to persistent structural limitations.”
Nyirongo acknowledged that the budget provided a satisfactory level of detail in certain areas, particularly in how the government plans to boost exports, but emphasized the need for more targeted interventions in key economic drivers such as Agriculture, Tourism, Manufacturing, and Mining.
“Prioritizing these sectors is critical if Malawi is to achieve sustainable economic growth,” – He said.
In the proposed 2025/26 national budget, government has increased total revenue and grants to K5.58 trillion from K4.35 trillion, while domestic revenue rose to K3.87 trillion from K3.11 trillion.
Total expenditure also grew to K8.05 trillion from K6.14 trillion, with the budget deficit slightly decreasing to K2.47 trillion from K2.47 trillion.
Domestic borrowing has also increased to K2.33 trillion from K1.59 trillion, while foreign borrowing declined to K145.78 billion from K196.49 billion
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