Frequently Asked Questions on Malawi

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Malawi's Extended Credit Facility program was approved on November 14, 2023.
The IMF Executive Board discussed the Second Review under Malawi’s Staff Monitored Program with Executive Board Involvement and approved a 48-month Arrangement under the Extended Credit Facility on November 15, 2023.
Last Updated: May 14, 2025.
The program automatically terminated on May 14, 2025, in accordance with IMF financing policies for low-income countries because no program review had been completed over an 18-month period.
While discussions between the IMF and the Malawian authorities have been ongoing, no program review has been completed.

Program implementation faced numerous challenges and was not able to achieve macroeconomic stability.
Fiscal discipline was difficult to maintain due to elevated spending pressures and insufficient revenue mobilization efforts.
Rebuilding international reserve buffers was challenging under the current foreign exchange system.
The external debt restructuring process—needed to restore debt sustainability—has not yet been concluded.
Macroeconomic stability is defined as a situation where key economic relationships (such as those between output and domestic demand, government revenues and expenditure, savings and investment, and the balance of payments) are broadly sustainable.
Some degree of imbalances, such as fiscal and current account deficits, can be consistent with economic stability if they can be sustainably financed.
Symptoms of instability include excessively high inflation, shortage of goods, or foreign exchange rationing; the exact mix is country-specific.
Macroeconomic stability is essential for achieving high and sustainable growth and should be a key component of any poverty reduction strategy.

IMF advice to Malawi has focused on policies aimed at restoring macroeconomic stability, including:
- Strengthen fiscal discipline and sustainability through revenue mobilization and improved public financial management.
- Support appropriate monetary policy to contain money growth and curb inflation.
- Rebuild international reserves and facilitate an exchange rate regime that supports external stability.
- Restructure external commercial debt to support debt sustainability.
- Implement structural reforms to improve governance, unleash productivity, support higher growth, and diversify exports.
In addition to restoring macroeconomic stability, IMF policy advice supports building a foundation for inclusive and sustainable growth and addressing weaknesses in governance and institutions.
Any programmatic lending arrangement requires strong policy ownership and commitment from the Government.

As part of its surveillance mandate, the IMF offers policy advice to support macroeconomic stability and propose reforms to support sustainable and inclusive growth.
While the ECF arrangement has expired, the IMF is currently holding Article IV consultations with the Malawian authorities.
The IMF continues to work with the authorities within its mandate by providing technical assistance to modernize economic policies, strengthen institutions, and build implementation capacity.
Examples of technical assistance include work to:
- Enhance tax collection and budget execution.
- Modernize monetary and exchange rate policies.
- Improve data quality.
A range of tailored financing tools remains available to give Malawi breathing room to adjust policies in an orderly manner, including concessional financial support (currently at zero interest rates) through the Poverty Reduction and Growth Trust.