Malawi

The 2025 Article IV Consultation discusses that Malawi continues to face significant macroeconomic challenges, including external shocks, structurally low growth, persistent inflation, unsustainable fiscal and debt dynamics, and declining Official Development Assistance. Economic activity in 2024 was hindered by lower-than-expected agricultural output and critical foreign exchange shortages, resulting in a decline of real gross domestic product growth to 1.8 percent from 1.9 percent in 2023. Impediments to macroeconomic stability and underlying fiscal dominance are not expected to be addressed. Under an illustrative reform scenario, these impediments to growth are gradually addressed and policy adjustment critical to regaining macroeconomic stability is implemented, resulting in higher growth and lower inflation. Structural reforms to support real growth and attract foreign investment. This includes fully operationalizing Integrated Financial Management and Information System across government agencies, reducing distortions in the economy, adopting a rigorous fiscal regime for mining to ensure new resources are allocated efficiently, eliminating regulatory burdens, implementing safeguard recommendations at the Reserve Bank of Malawi and continuing governance and transparency reforms.