Public sector debt to banks jumps to K8.2Trillion in third quarter of 2025
RBM
Public sector debt to the banking system grew sharply in the third quarter of 2025, rising by K941.5 billion to reach K8.2 trillion.
This is according to the third issues of the Reserve Bank of Malawi’s Financial and Economic Review published on Wednesday on their website.
Authorities attributed the increase to central government borrowing where the net credit climbed by K900.6 billion to K7.6 trillion between July and September, reflecting continued funding pressures on the Treasury.
Commercial banks increased their lending to government by K462.8 billion, bringing their total credit to K4.3 trillion.
This was mainly driven by higher holdings of Treasury notes and Treasury bills, which rose by K324.6 billion and K196.7 billion, respectively.
Lilongwe, however, slightly reduced its borrowing position by raising deposits by K37.9 billion and repaying loans of K37.9 billion and K20.9 billion.
Credit from RBM to government also grew, rising by K437.9 billion to K3.3 trillion, an increase supported by a K557.7 billion rise in the Central Bank’s Treasury note holdings and a K22.2 billion increase in Ways and Means advances.
This expansion was partly offset by a K142 billion jump in government deposits following inflows from development partners. The RBM held no Treasury bills during the quarter.
Credit to state-owned enterprises also increased, with RBM’s outstanding credit rising by K40.8 billion, while commercial banks’ exposure grew modestly by K41 million.
Meanwhile, private sector credit showed mixed performance. Although the annual growth rate accelerated sharply to 48.9 percent, the stock of private sector credit fell by K257.7 billion to K2.2 trillion during the quarter.
The decline followed reduced lending in commercial and industrial loans, household loans, foreign currency loans, and mortgages.
Despite the overall drop, several industries recorded increased borrowing during the period.
Manufacturing led with a K98.1 billion rise, followed by wholesale and retail (K49.7 billion), community and social services (K48 billion), agriculture and related sectors (K24.4 billion).
On the other hand financial services (K16.4 billion). Smaller increases were seen in hospitality, construction, transport, mining, and energy with the real estate sector recording a net repayment of K600.7 million.
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