MALAWI’S ECONOMY WORSENS, IMF HIGHLIGHTS MACROECONOMIC CHALLENGES
By: Malawi24
The International Monetary Fund (IMF) has warned that Malawi’s economy is facing significant challenges, including high inflation, persistent deficits, unsustainable fiscal debt, foreign exchange shortages, and fuel scarcity.
These challenges have been highlighted in the IMF’s 2025 Article IV consultation with Malawi, which notes that the country’s GDP has declined to 1.8% from 1.9% in 2023.
According to the IMF, the overall fiscal deficit stands at 10.1% in the 2024/2025 fiscal year, attributed to low projected revenue, election spending, and an increase in interest bills.
The IMF also reports that public debt dynamics remain unsustainable, with total public debt reaching 88% of GDP by the end of 2024, and interest bills on public debt estimated to approach 7% of GDP.
The 2023 Extended Credit Facility (ECF) to Malawi was automatically terminated on May 14, 2025, after 18 months without completing a review since its approval.
In light of these significant downside risks, IMF directors have emphasised the need for decisive and urgent policy action to stabilise the economy and implement reforms that foster sustained and inclusive growth, ultimately improving living conditions for Malawians.
The IMF has appealed to the government of Malawi to raise domestic revenue, reform unnecessary spending, stabilise the exchange rate, and control corruption, as the country’s foreign exchange reserves are down to less than a week’s worth of imports.