Malawi’s 2025-26 financial year closed on Tuesday with government spending reaching K8.425 trillion, below the K8.589 trillion approved at mid-year, after a K468.6 billion slowdown in expenditure in the second half of the fiscal year.
The outcome marks a sharp contrast to the 2024-25 fiscal year, when the government overshot its budget by about K500.664 billion, drawing criticism from the opposition over alleged wasteful spending.
An analysis of figures in the Supplementary Appropriation (2025-26) Bill, tabled by Finance Minister Joseph Mwanamvekha and passed by Parliament on Tuesday, shows that of the roughly K8.4 trillion total expenditure, about K4.4 trillion was spent in the first half of the financial year, from April to September 2025, under the previous administration.
Spending in the second half (from October to March) amounted to K3.95 trillion, including foreign-financed resources.
Mwanamvekha said expenditure declined by K468.6 billion in the latter half of the fiscal year due to the implementation of spending control measures.
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“However, if we exclude foreign-financed resources (Part I expenditure), government-funded spending—including salaries, other recurrent transactions (ORT) and Development Part II expenditure—fell by K875.9 billion, demonstrating the level of fiscal discipline the new administration is exercising,” he said.
Parliament initially approved a K8.076 trillion budget in March last year, which was later revised to K8.589 trillion at mid-year in November.
Economist Marvin Banda said the K173 billion underspent may appear to signal fiscal discipline, but warned it should not be viewed as an automatic positive in Malawi’s context.
Scotland-based economist Velli Nyirongo said the implications of the underspend depended on how the figures were interpreted and the factors behind them.
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“On the surface, spending less than the approved budget can appear to be a sign of fiscal discipline.
“A gap of K173 billion between the revised allocation and actual spending could, in principle, reflect tighter controls, improved efficiency or a conscious effort to limit borrowing,” he said.
However, Nyirongo cautioned that underspending was not inherently positive.
“When allocated funds are not utilised, it often means infrastructure projects stall, public services are delayed, or essential investments in health, education and development do not materialise,” he said.
“In such cases, the ‘savings’ may come at a real cost to citizens and long-term economic growth.” He added that underspending could also point to structural inefficiencies such as procurement bottlenecks, weak administrative systems or delayed disbursement of funds
