The latest published Reserve Bank of Malawi 2019 Reports and Accounts figures show that the government’s borrowing from commercial banks has increased by 159.6%.

From K21.3 billion to K55.7 billion last year alone, State-owned enterprises sought credit from the banks, while the banks’ net claims from Treasury grew by K175.8 billion to K462.4 billion with Treasury bills (T-bills). Last year, Minister of Finance, Joseph Mwanamvekha said in December that borrowing from RBM proved to be more inflationary as it involves the printing of money. “We want to be prudent by avoiding the printing of more money which pushes inflation and other macroeconomic indicators,” said Mwanamvekha.

On the other hand, RBM revised lending towards the government by implementing a cap, courtesy of the RBM Act. Henceforth, the central bank will only borrow the government not more than 10% of the total budget revenue, as the move is also aimed to curb overborrowing.