RISING SPENDING RISKS DRAGGING GOVERNMENT INTO DEBT TRAP

Article By: Gilbert Manenye

The Ministry of Finance has warned that the government is facing an elevated risk of falling into a debt trap if government spending is not meaningfully restrained.

According to the Ministry, persistent budget deficits and limited fiscal buffers are pushing public debt onto an un-sustainable path as debt-to-GDP ratio is projected to reach 37.2% by March 2026, following the government’s continued reliance on borrowing to finance expenditure.

The ministry has since cautioned that without corrective measures, the government could find itself trapped in a cycle where it borrows more to pay off existing debt instead of funding projects that grow the economy.

To mitigate these risks, the ministry says there is an urgent need to restore fiscal sustainability through cutting unnecessary spending, increasing government revenue and prioritising capital projects that give high returns.