Malawi’s fiscal position continues to deteriorate despite ongoing public finance management reforms, with government expenditure rising faster than revenue and widening the financing gap.
Figures from the African Development Bank (AfDB)’s latest Country Focus Report show domestic revenue grew from 14.7 percent of gross domestic product (GDP) in 2022 to 18.1 percent in 2024.
Over the same period, expenditure surged from 26.8 percent to 32 percent of GDP.
The imbalance has pushed public debt to K22.4 trillion, underscoring mounting fiscal pressure.
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The situation has been worsened by declining external support.
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AfDB statistics indicate that external financing accounted for 25.7 percent of total revenue in 2025, down from 26.3 percent in 2024, leaving the government increasingly reliant on domestic borrowing.
Economics Association of Malawi (Ecama) President Berthe Bangara Chikadza faulted unchecked expenditure.
In a written response on Tuesday, she said borrowing had reached unsustainable levels, thereby undermining efforts to stabilise the economy.
She said tighter expenditure controls were critical but noted that statutory obligations such as salaries and utility bills consumed a large share of the budget, leaving little room for cuts.
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She added that unplanned spending, triggered by shocks such as weather-related disasters, further complicated fiscal management.
“Uncontrolled expenditure fuels borrowing and increases interest payments. This is a serious challenge for the country, especially at this point where domestic borrowing remains an automatic source of deficit,” Chikadza said.
She also highlighted a disconnect between actual spending and priority growth sectors, saying this imbalance limited revenue mobilisation and entrenched deficits.
She called for fiscal consolidation anchored in discipline.
“Fiscal consolidation cannot be achieved without fiscal discipline. It is imperative for [the] government to remain committed to spending within its planned deficit, as this demonstrates commitment to consolidation,” she said.
Reserve Bank of Malawi figures show that, in November 2025, central government revenue stood at K422.1 billion against expenditures of K498.5 billion, resulting in a deficit of K76.4 billion.
Meanwhile, Finance Minister Joseph Mwanamvekha has hinted that, in the 2026-27 fiscal plan, the Treasury is expected to balance consolidation with measures to stimulate economic recovery.
“One of the main drivers of our rising public debt is the heavy interest burden, particularly on local borrowing.
Other countries have managed this by capping lending rates or narrowing the spread between lending and deposit rates, and perhaps Malawi should explore similar measures. The bigger question remains: How do we control expenditure, widen the tax base and generate more foreign exchange to strengthen reserves and improve the balance of payments? These are challenges that require collective solutions,” Mwanamvekha said during pre-budget consultations in Blantyre recently.
