Malawi's long walk to economic recovery

Slightly over a week ago, an International Monetary Fund (IMF) team concluded its first two-week mission in Malawi, which comes over 12 months after the previous four-year $175 million (about K306 billion) arrangement ended abruptly. As WILLIAM KUMWEMBE writes, the road to securing a new deal would be long and winding, with much sacrifices. But a critical question lingers on Malawi's readiness to sustain the programme, if or when secured, as history suggests that since 2010, the country has had about four ECF programmes. But none was concluded. In recent years, Malawi's desperate attempt to walk out of its economic woes using an externally supported recovery plan under the ECF programme of the IMF has proven futile. Economists attribute it to failure by authorities to meet the programme agreed targets due to what they rate as obsession with populists' interventions over long-term economic gains. The journey has been cyclical; with local authorities continually navigating through months of negotiations to have the credit facility approved, and the successive requirement to adhere to strict economic reforms. Using the programme, the IMF gives loans to economically troubled countries, like Malawi. But it does not come on a silver platter. The Fund emphases on fiscal consolidation, debt sustainability, and forex reserves accumulation; targets Malawi has continually drifted from. The country's macroeconomic landscape remains challenge, with figures from Economics Association of Malawi (Ecama), show inflation standing at 24.3 percent in first quarter of the year, public debt at 90 percent of the gross domestic product (GDP), and the country still experiencing persistent foreign exchange challenges. A history of failures Of the four ECF programmes Malawi has had with the IMF since 2010, according to our desk research, none came to conclusion. In March 2010, a 3-year programme worth $79.4 million (about K137.8 billion) was approved. But it derailed, and was declared offtrack by April of the following year as the government failed meet key of the conditions which included maintaining a flexible exchange rate and liberalizing the current account. Another deal was secured in July 2012, to help stabilize the economy following severe macroeconomic imbalances. But its implantation was highly uneven due to governance concerns, election-year spending, and missing performance criteria led to the suspension of budget support. Fol l owing extensive economic reforms , including a 44 percent devaluation of the Malawian Kwacha, the IMF approved a 4-year, $175 million ECF on November 14, 2023. But by May 2025, the government announced to have mutually agreed with the Fund to terminate the programme, consequently forfeiting about $140 million. In essence, the government was unable to complete the required programme review within the stipulated 18-month timeframe. Exogenous shocks and missed fiscal benchmarks were cited as primary impediments. Experts' views Economists attribute the flip-flops to to low compliance to economic recovery plans by the government. In its recent economic trend review, Ecama called on the government to treat completion of the next possible programme as its core objective and set the economic reforms realistically. In an interview yesterday, Ecama President Bertha Chikadza said Malawi should not focus on 'one-sizefits-all' approach in negotiating the next facility. "Malawi has been failing to conclude most of its ECF programmes due to failure to meet the agreed targets, especially the quantitative ones. It could also be to the fact that we do agree to targets that are not achievable all the times," she said. Another economist Christopher Mbukwa proposed caution in the further talks on conditions for the next ECF programme. "Going forward, authorities should give careful attention to the conditions that are coming, and we should be absolutely clear on how we intend to caution the masses, should there be conditions that are necessary to be implemented, but have consequences," he said. Anywhere near out of the woods? In its 2025 Article IV Staff report, the IMF outlines key policy recommendations for Malawi in four key areas which include fiscal policy, monetary and financial policy, exchange rate management and structural governance. These serve as baseline framework for discussions Malawi had with the IMF mission team two weeks ago. The fund says it acknowledges the authorities' recent actions to stabilise the country's fiscal situation—which has been fund's greatest concern and one of the reasons for abortion of the previous ECF program me—and addresses other challenges facing the economy. "Discussions will continue on the package of policies and reforms that could be supported under an ECF arrangement," IMF Mission Chief Justin Tyson said in a statement. In recent months, the government has taken drastic measures including re-introduction of the automatic fuel price mechanism—a system designed to align domestic pump prices with global oil markets and exchange rate movement— which saw fuel prices rising by about 44 percent in April. Treasury spokesperson Williams Banda said the government's position aligns with that of the fund in ensuring prudence in management of the fiscus towards economic recovery. But Budget and Finance Committee of Parliament chairperson Sosten Gwengwe said Malawi needs to be decisive. "We have just been moving in cycles and we have not come out of foreign exchange problems, neither have we successfully concluded an ECF to move one step ahead in as far as economic growth is concerned. "We are stuck at the first stage of stabilizing the economic fundamentals. We need to act, and act swiftly," he said. What's in the ECF programme An ECF programme is an IMF's main tool for medium-term financial support to low-income countries, and it brings about financial assistance to countries, like Malawi, with a volatile balance of payments position. An ECF programme is an IMF's main tool for medium-term financial support to low-income countries. It brings about financial assistance to countries, like Malawi, with a volatile balance of payments (BoP) position—a record of all transactions by a country and the rest of the world. It helps mitigate foreign exchange scarcity on the market. The arrangement is also touted for its "signaling effect" of triggering direct budget support and restoring dornor-confidence. It helps mitigate foreign exchange scarcity on the market, and is touted for its "signalling effect" of triggering direct budget support and restoring dornor-confidence.

Times Malawi Times Malawi · Wire Report · Wed, 01 Jul 2026 16:21:22 · 6 min read

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WIRE — Slightly over a week ago, an International Monetary Fund (IMF) team concluded its first two-week mission in Malawi, which comes over 12 months after the previous four-year $175 million (about K306 billion) arrangement ended abruptly. As WILLIAM KUMWEMBE writes, the road to securing a new deal would be long and winding, with much sacrifices. But a critical question lingers on Malawi's readiness to sustain the programme, if or when secured, as history suggests that since 2010, the country has had about four ECF programmes. But none was concluded. In recent years, Malawi's desperate attempt to walk out of its economic woes using an externally supported recovery plan under the ECF programme of the IMF has proven futile. Economists attribute it to failure by authorities to meet the programme agreed targets due to what they rate as obsession with populists' interventions over long-term economic gains. The journey has been cyclical; with local authorities continually navigating through months of negotiations to have the credit facility approved, and the successive requirement to adhere to strict economic reforms. Using the programme, the IMF gives loans to economically troubled countries, like Malawi. But it does not come on a silver platter. The Fund emphases on fiscal consolidation, debt sustainability, and forex reserves accumulation; targets Malawi has continually drifted from. The country's macroeconomic landscape remains challenge, with figures from Economics Association of Malawi (Ecama), show inflation standing at 24.3 percent in first quarter of the year, public debt at 90 percent of the gross domestic product (GDP), and the country still experiencing persistent foreign exchange challenges. A history of failures Of the four ECF programmes Malawi has had with the IMF since 2010, according to our desk research, none came to conclusion. In March 2010, a 3-year programme worth $79.4 million (about K137.8 billion) was approved. But it derailed, and was declared offtrack by April of the following year as the government failed meet key of the conditions which included maintaining a flexible exchange rate and liberalizing the current account. Another deal was secured in July 2012, to help stabilize the economy following severe macroeconomic imbalances. But its implantation was highly uneven due to governance concerns, election-year spending, and missing performance criteria led to the suspension of budget support. Fol l owing extensive economic reforms , including a 44 percent devaluation of the Malawian Kwacha, the IMF approved a 4-year, $175 million ECF on November 14, 2023. But by May 2025, the government announced to have mutually agreed with the Fund to terminate the programme, consequently forfeiting about $140 million. In essence, the government was unable to complete the required programme review within the stipulated 18-month timeframe. Exogenous shocks and missed fiscal benchmarks were cited as primary impediments. Experts' views Economists attribute the flip-flops to to low compliance to economic recovery plans by the government. In its recent economic trend review, Ecama called on the government to treat completion of the next possible programme as its core objective and set the economic reforms realistically. In an interview yesterday, Ecama President Bertha Chikadza said Malawi should not focus on 'one-sizefits-all' approach in negotiating the next facility. "Malawi has been failing to conclude most of its ECF programmes due to failure to meet the agreed targets, especially the quantitative ones. It could also be to the fact that we do agree to targets that are not achievable all the times," she said. Another economist Christopher Mbukwa proposed caution in the further talks on conditions for the next ECF programme. "Going forward, authorities should give careful attention to the conditions that are coming, and we should be absolutely clear on how we intend to caution the masses, should there be conditions that are necessary to be implemented, but have consequences," he said. Anywhere near out of the woods? In its 2025 Article IV Staff report, the IMF outlines key policy recommendations for Malawi in four key areas which include fiscal policy, monetary and financial policy, exchange rate management and structural governance. These serve as baseline framework for discussions Malawi had with the IMF mission team two weeks ago. The fund says it acknowledges the authorities' recent actions to stabilise the country's fiscal situation—which has been fund's greatest concern and one of the reasons for abortion of the previous ECF program me—and addresses other challenges facing the economy. "Discussions will continue on the package of policies and reforms that could be supported under an ECF arrangement," IMF Mission Chief Justin Tyson said in a statement. In recent months, the government has taken drastic measures including re-introduction of the automatic fuel price mechanism—a system designed to align domestic pump prices with global oil markets and exchange rate movement— which saw fuel prices rising by about 44 percent in April. Treasury spokesperson Williams Banda said the government's position aligns with that of the fund in ensuring prudence in management of the fiscus towards economic recovery. But Budget and Finance Committee of Parliament chairperson Sosten Gwengwe said Malawi needs to be decisive. "We have just been moving in cycles and we have not come out of foreign exchange problems, neither have we successfully concluded an ECF to move one step ahead in as far as economic growth is concerned. "We are stuck at the first stage of stabilizing the economic fundamentals. We need to act, and act swiftly," he said. What's in the ECF programme An ECF programme is an IMF's main tool for medium-term financial support to low-income countries, and it brings about financial assistance to countries, like Malawi, with a volatile balance of payments position. An ECF programme is an IMF's main tool for medium-term financial support to low-income countries. It brings about financial assistance to countries, like Malawi, with a volatile balance of payments (BoP) position—a record of all transactions by a country and the rest of the world. It helps mitigate foreign exchange scarcity on the market. The arrangement is also touted for its "signaling effect" of triggering direct budget support and restoring dornor-confidence. It helps mitigate foreign exchange scarcity on the market, and is touted for its "signalling effect" of triggering direct budget support and restoring dornor-confidence.

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