Analyst cautions govt on domestic borrowing

Economics and Business Lecturer at Malawi Institute of Journalism – MIJ has warned that the listed MK5 billion Treasury note will be a futile attempt if the money will only be used for consumption.

Murry Siyasiya was reacting to a business statement released by Malawi Stock Exchange – MSE on Monday on government’s move to raise its funds by domestic borrowing through the stock market.

According to MSE’s statement the move will boost the investment sector in the country.

“It’s an opportunity to investors as this will create an avenue for investment and business growth as the development will add to diversity of listing on the local market and increase interests,” reads the statement in part.

Siyasiya has backed the move adding it will enable investors to among others, enjoy a positive real return, improve price discovery through open and transparent market and reduce risk of default.

However, Siyasiya said the Treasury must make sure the borrowing is channelled to investments rather than on consumption.

“I can give a benefit of thought if only government can capitalize on investment rather than on consumption – if our borrowing is only meant for consumption, am sorry we have a big problem,” Siyasiya said.

The listing by Malawi government through the Reserve Bank of Malawi (RBM) on the stock market has issued a debt instrument for a period of two years worth MK5 billion on Malawi Stock Exchange.

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