MEFMI supports Malawi on securities market development

Like other low-income countries in the MEFMI region, Malawi has experienced a substantial decline in official development assistance in recent years. As a result, there has been an enormous shift in the way government has been financing its national development priorities over the last five years, with the domestic debt market becoming an important source. As a result, the composition of debt shifted substantially from external to domestic.

Despite considerable progress in establishing domestic government securities market in Malawi, the market remains underdeveloped relative to others in the region. As a result, the cost of servicing domestic debt has been high, due to high interest rates and the short-term maturity profile of government securities. In this regard, the development of domestic debt market to support government’s financing requirements is a priority. Recognising the critical role of domestic debt markets, the Ministry of Finance, Planning and Economic Development, requested MEFMI for technical assistance to enhance capacity of the Debt and Aid Management Division for managing domestic debt and drive reforms in financial markets. MEFMI provided this assistance at a workshop held from 29 April to 3 May 2019 in Dowa, Malawi.

The workshop aimed to impart knowledge and develop practical skills needed to effectively manage domestic debt and enhance efficiency in the primary issuance of government securities and their trading in the secondary market. It also provided a platform to identify priority areas for reform to support development of the domestic debt market in Malawi. A total of 19 officials participated in the workshop, and these came from the Ministry of Finance Planning and Economic Development.

The workshop equipped participants with practical skills required to effectively manage public domestic debt and identify priority areas that must be addressed to support development of the government securities market. The participants drafted a reform plan for consideration by senior authorities. MEFMI will continue to engage country officials to explore ways to support implementation of identified priority areas once the draft reform plan has been approved by the authorities.