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Abstract:
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In 2006, Malawi benefitted from the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). A large proportion of Malawi’s external debt was cancelled resulting in a significant reduction of the external debt stock from US$2.9 billion to US$488 million. In order to ensure that the country does not return to unsustainable external debt levels in future, Government made a commitment to ensure prudent financial and economic management including undertaking reforms in public debt management. One of the key elements of improved public debt management operations involves conducting debt sustainability analyses (DSAs) on a regular basis aimed at monitoring evolution of the public external and domestic debt in relation to the status of the economy. Since 2006, several DSAs have been conducted more or less on an annual basis. The most recent DSA Report preceding the current one was published in June 2011. The DSA for 2012 was conducted from 9th to 20th July, 2012 in Lilongwe. The main objective of the DSA was to assess the sustainability of Malawi’s external and total public debt portfolio within the medium- to long – term thereby updating the findings of the DSA that was conducted in June 2011 and use the results to feed into the review of the Medium Term Debt Management Strategy (MTDS) that was approved in 2010. The 2012 DSA was necessitated by the fact the macroeconomic policy environment and economic outlook had changed drastically compared to the June 2011 situation. |