{
  "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Malawi",
  "publication": "IMF News, July 22, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/07/22/pr25261-malawi-imf-executive-board-concludes-2025-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Malawi.",
  "publishDate": "2025-07-22",
  "sections": [
    {
      "heading": "Macroeconomic context and recent developments",
      "content": "- Economic activity in 2024: real GDP growth declined to 1.8 percent from 1.9 percent in 2023.\n- Factors weighing on 2024 performance: lower-than-expected agricultural output and critical foreign exchange shortages.\n- Exchange rate policy: official exchange rate against the US dollar fixed since April last year, largely erasing benefits of the November 2023 devaluation.\n- Inflation dynamics:\n  - Peak: 30.7 percent year-over-year in February 2024.\n  - May 2025: eased to 27.7 percent in the context of the harvest season.\n  - Drivers: high food prices, elevated money growth, wide official-parallel exchange rate spread.\n- Fiscal position:\n  - Overall fiscal deficit in FY2024/25: 10.1 percent of GDP (due to lower-than-projected revenues, election-related spending, and increasing interest bill).\n  - 2023 Extended Credit Facility (ECF) automatically terminated on May 14, 2025 after eighteen months since approval without completing a review.\n- External sector and reserves:\n  - Current account deficit worsened significantly on elevated import demand.\n  - Gross official reserves: 149 (2024), 118 (2025) [US$ millions].\n  - Months of imports: 0.4 (2024), 0.3 (2025).\n  - Net international reserves: -1,216 (2024), -2,027 (2025) [US$ millions].\n- Public debt and interest burden:\n  - Total public debt reached 88 percent of GDP by the end of 2024 (table reports 87.6 percent for 2024 and 80.2 percent for 2025).\n  - Interest bill on public debt is estimated to be approaching 7 percent of GDP."
    },
    {
      "heading": "Medium-term outlook and risks",
      "content": "- Growth projections:\n  - 2025: 2.4 percent.\n  - Medium-term increase to 3.4 percent by 2029.\n- Inflation outlook: expected to remain high, stabilizing at around 15 percent over the medium term.\n- Primary deficits: expected to persist, contributing to inflationary trends.\n- Downside risks:\n  - Continuation of loose macroeconomic policies.\n  - Greater-than-expected reduction in donor support.\n  - Persistent trade tensions.\n  - Social unrest surrounding the elections.\n  - Lower food production.\n- Upside risks:\n  - Mining investment.\n  - Change in policy direction with a strong reform agenda to stabilize the macroeconomy."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Overall assessment:\n  - Malawi is at a critical juncture with high inflation, unsustainable fiscal and debt outlook, FX shortages, and fuel scarcity.\n  - Significant downside risks warrant decisive and urgent policy action.\n- Fiscal policy recommendations:\n  - Fiscal consolidation focused on domestic revenue generation is essential to reduce inflationary pressures and improve debt sustainability.\n  - Urged tax policy and revenue administration reforms to broaden the tax base.\n  - Contain the interest and wage bills while rebalancing expenditures toward infrastructure, human capital investment, and social protection.\n  - Improve public financial management to enhance expenditure control and budget execution.\n  - Strengthen state owned enterprises.\n  - Adopt a credible medium term fiscal framework to anchor fiscal sustainability.\n  - Take decisive steps to restore public debt sustainability within a medium-term adjustment program.\n  - Complete external debt restructuring and address the high cost of domestic borrowing.\n  - Strengthen debt management and secure concessional financing.\n- Monetary and financial sector recommendations:\n  - Tighten monetary policy stance to reanchor inflation expectations, supported by fiscal adjustment to eliminate deficit monetization.\n  - Fully implement the Safeguards Assessment recommendations to support central bank independence and monetary policy implementation.\n  - Vigilance and proactive management of financial sector risks, including FX exposure and the sovereign–bank nexus.\n  - Prudent fiscal policy to support financial sector stability and reduce crowding out of the private sector.\n- Exchange rate and reserves:\n  - Move to a unified market-clearing exchange rate seen as integral to macroeconomic stability and accelerating growth under a broader adjustment program.\n  - A more flexible, market-determined rate would help absorb shocks and rebuild foreign reserves.\n  - Careful sequencing, communication, and proactive mitigation of social and financial impacts recommended for a successful transition.\n- Governance and structural reforms:\n  - Advance governance and structural reforms to improve the investment climate and promote economic diversification.\n  - Reduce economic distortions and regulatory burdens and advance the fight against corruption.\n  - Enhance transparency; publish the 2024 Governance Diagnostic Assessment.\n  - Strengthen the AML/CFT framework and address data gaps.\n- Cooperation and sequencing:\n  - Building domestic support for reforms is crucial.\n  - Active engagement with the Fund and donor partners is important to support reform efforts and learn lessons from past experience."
    },
    {
      "heading": "Key selected economic indicators (2023–25) — headline figures from the staff table",
      "content": "- GDP at constant market prices:\n  - 2023 actual: 1.9\n  - 2024 est.: 1.8\n  - 2025 proj.: 2.4\n- Nominal GDP (billions of Kwacha):\n  - 2023: 15,475\n  - 2024: 20,322\n  - 2025: 25,956\n- GDP deflator:\n  - 2023: 27.7\n  - 2024: 29.9\n  - 2025: 25.3\n- Consumer prices (end of period):\n  - 2023: 34.5\n  - 2024: 28.1\n  - 2025: 25.4\n- National savings (percent of GDP):\n  - 2023: -5.5\n  - 2024: -9.2\n  - 2025: -5.7\n- Gross investment (percent of GDP):\n  - 2023: 11.8\n  - 2024: 12.7\n  - 2025: 9.0\n- Central government revenue (percent of GDP, fiscal year basis):\n  - 2023: 17.2\n  - 2024: 18.5\n  - 2025: 19.1\n- Expenditure and net lending (percent of GDP):\n  - 2023: 27.5\n  - 2024: 29.1\n  - 2025: 29.2\n- Overall balance (including grants, percent of GDP):\n  - 2023: -10.3\n  - 2024: -10.6\n  - 2025: -10.1\n- Foreign financing (percent of GDP):\n  - 2023: 3.3\n  - 2024: 1.3\n  - 2025: 1.1\n- Total domestic financing (percent of GDP):\n  - 2023: 7.0\n  - 2024: 7.2\n  - 2025: 9.1\n- Broad money (change in percent of broad money at end period):\n  - 2023: 45.1\n  - 2024: 36.7\n- Net foreign assets (change in percent of broad money):\n  - 2023: -19.8\n  - 2024: -11.2\n  - 2025: -2.3\n- Net domestic assets (change in percent of broad money):\n  - 2023: 52.0\n  - 2024: 56.3\n  - 2025: 39.0\n- Net claims on the government (change in percent of broad money):\n  - 2023: 46.6\n  - 2024: 50.1\n  - 2025: 32.7\n- Credit to the private sector (percent change):\n  - 2023: 17.6\n  - 2024: 29.3\n  - 2025: 19.9\n- External sector (US$ millions):\n  - Exports (goods and services): 1,521 (2023), 1,433 (2024), 1,531 (2025)\n  - Imports (goods and services): 3,984 (2023), 4,204 (2024), 4,249 (2025)\n  - Gross official reserves: 201 (2023), 149 (2024), 118 (2025)\n- Current account overall balance (percent of GDP):\n  - 2023: 0.7\n  - 2024: -0.1\n  - 2025: -5.9\n- Total public debt (percent of GDP):\n  - 2023: 83.6\n  - 2024: 87.6\n  - 2025: 80.2\n- External debt service (percent of exports):\n  - 2023: 11.6\n  - 2024: 11.7\n  - 2025: 64.0\n- External debt service (percent of revenue excl. grants):\n  - 2023: 9.9\n  - 2024: 45.7\n\nIMF Press Release No. 25/261, July 22, 2025.\n\n---\n\n\n References\n\n- Malawi and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/countries/MWI\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/07/22/pr25261-malawi-imf-executive-board-concludes-2025-article-iv-consultation"
    }
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    "Published: July 22, 2025",
    "Economic activity in 2024: real GDP growth declined to 1.8 percent from 1.9 percent in 2023.",
    "Factors weighing on 2024 performance: lower-than-expected agricultural output and critical foreign exchange shortages.",
    "Exchange rate policy: official exchange rate against the US dollar fixed since April last year, largely erasing benefits of the November 2023 devaluation.",
    "Inflation dynamics:",
    "Fiscal position:",
    "External sector and reserves:",
    "Public debt and interest burden:",
    "Growth projections:",
    "Inflation outlook: expected to remain high, stabilizing at around 15 percent over the medium term.",
    "Primary deficits: expected to persist, contributing to inflationary trends.",
    "Downside risks:",
    "Upside risks:",
    "Overall assessment:",
    "Fiscal policy recommendations:",
    "Monetary and financial sector recommendations:",
    "Exchange rate and reserves:",
    "Governance and structural reforms:",
    "Cooperation and sequencing:",
    "GDP at constant market prices:",
    "Nominal GDP (billions of Kwacha):",
    "GDP deflator:",
    "Consumer prices (end of period):",
    "National savings (percent of GDP):",
    "Gross investment (percent of GDP):",
    "Central government revenue (percent of GDP, fiscal year basis):",
    "Expenditure and net lending (percent of GDP):",
    "Overall balance (including grants, percent of GDP):",
    "Foreign financing (percent of GDP):",
    "Total domestic financing (percent of GDP):",
    "Broad money (change in percent of broad money at end period):",
    "Net foreign assets (change in percent of broad money):",
    "Net domestic assets (change in percent of broad money):",
    "Net claims on the government (change in percent of broad money):",
    "Credit to the private sector (percent change):",
    "External sector (US$ millions):",
    "Current account overall balance (percent of GDP):",
    "Total public debt (percent of GDP):",
    "External debt service (percent of exports):",
    "External debt service (percent of revenue excl. grants):",
    "[Malawi and the IMF](http://www.imf.org/external/country/MWI/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[www.imf.org/countries/MWI](http://www.imf.org/countries/MWI)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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