External debt jumps to $4 billion

Malawi’s external debt stock increased by 8.1 percent to $4.048 billion (approximately K7.09 trillion) in 2025, highlighting the country’s growing reliance on external financing.

The World Bank’s 2026 International Debt Report shows that the country’s debt to external creditors has more than doubled over the past decade, rising from $1.723 billion in 2015 to $4.048 billion in 2025.

The figures come against a wider global debt challenge, with the World Bank indicating that external debt stock among low and middle-income countries increased by 5.5 percent to reach $9.4 trillion in 2025, the fastest pace since 2021 and about four times the 2022–24 average.

In a statement, the World Bank said while access to international finance has improved, debt has become more expensive for the poorest countries, threatening to crowd out investments, as their total debt-service payments rose to $1.4 trillion in the year under review.

For Malawi, public and publicly guaranteed debt accounted for $3.972 billion, representing about 98 percent of the country’s total external debt stock.

Multilateral institutions held the largest share of this debt, with claims amounting to $3.599 billion, or about 90.6 percent of public and publicly guaranteed external debt.

The World Bank’s International Development Association (IDA) was the largest individual creditor, accounting for $1.895 billion, followed by other multilateral lenders at $1.234 billion and the African Development Bank at $470 million.

Bilateral creditors accounted for $373 million, including $219 million owed to China and $80 million to India.

The report further shows that Malawi received no new external debt commitments from private creditors in 2025 and that new commitments from official creditors had an average maturity of 23 years, a four-year grace period and an average interest rate of 1.1 percent.

World Bank Group Chief Statistician and Director of Development Data, Haishan Fu, called for responsible debt management for countries to ensure debt sustainability.

Economist Marvin Banda said decades of borrowing and development assistance had not sufficiently strengthened the country’s capacity to earn foreign exchange.

He further said growing debt stock pointed to a deeper weakness in the economy

“That is the real indictment of Malawi’s economic management. We have become better at borrowing than at building an economy that is capable of repaying what it borrows,” he said.

The government allocated K2.793 trillion for public debt interest in the current 2026-27 national budget, which is pegged at K10.9 trillion.

Finance Minister Joseph Mwanamvekha indicated that the government was working on both external and domestic debt restructuring to further reduce debt interest payment.