
24/07/2025
IMF Warns of Economic Crisis in Malawi as Debt and Inflation Spiral
July 23rd, 2025
Capital City, Lilongwe, Malawi 🇲🇼
Malawi’s economy is teetering on the brink of crisis, with the International Monetary Fund (IMF) warning of soaring debt, crippling foreign exchange shortages, and persistently high inflation. In a stark assessment issued Tuesday,23,2025 the IMF said its Extended Credit Facility (ECF) program with Malawi was terminated in May without completing a single review, cutting off access to vital financial support.
The IMF’s report, endorsed by its Executive Board, paints a troubling picture: inflation remains at 27.7 percent, economic growth has slowed significantly, and public debt has surged to 88 percent of GDP. With the country maintaining a fixed exchange rate, foreign exchange reserves have plummeted to less than one week’s worth of imports, threatening Malawi’s ability to sustain essential goods such as fuel, medicines, and food.
“Malawi faces acute economic challenges that require urgent and decisive policy actions,” the IMF cautioned, urging the government to address fiscal and structural weaknesses.
The IMF is pressing Malawi’s authorities to raise domestic revenue, cut unnecessary public spending, and implement exchange rate reforms to ease mounting pressure on the kwacha. The Fund has also called for stronger debt management and anti-corruption measures to restore donor confidence and unlock international financial support.
The termination of the ECF program is a major setback for Malawi, which had hoped to leverage the facility to stabilize its economy and attract other donors. Without IMF backing, the government faces an uphill battle to secure foreign financing and stabilize the economy, which is already grappling with the aftermath of drought, declining to***co exports, and rising global commodity prices.
Analysts warn that unless reforms are accelerated, the country risks sinking deeper into economic turmoil, with potentially severe consequences for social stability.
Reported by Ephraim Mkali Banda
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