The Governments of Malawi and Norway have signed a Bilateral Grant Agreement valued at 318 million Norwegian krone (approximately US$31.8 million or K55.7 billion) to strengthen Malawi’s health and food security sectors. Under the agreement, US$19.5 million (K34.1 billion) will support the Health Services Joint Fund (HSJF), while US$12.3 million (K22.9 billion) will be directed towards food security initiatives. Speaking at the signing ceremony in Lilongwe, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha commended the Norwegian government for its continued partnership. “This grant will go a long way in fulfilling the objectives of the Health Sector Strategic Plan III and in strengthening our public financial management systems,” Mwanamvekha said. Norwegian Ambassador to Malawi Anne Sofie Bjelland reaffirmed her government’s commitment to supporting Malawi’s development priorities. “Today’s signing reflects Norway’s strong partnership with Malawi in promoting quality health care and sustainable development,” she stated. Minister of Health and Sanitation Madalitso Baloyi also acknowledged Norway’s long-standing contribution, noting that since 2015, Norway has invested over US$74 million through the HSJF. “This support has expanded access to reproductive health services and equipped hundreds of health facilities across the country,” Baloyi said. The Health Services Joint Fund has played a key role in improving access to quality healthcare, constructing new facilities, and equipping more than 300 hospitals nationwide.

AFORD President Enoch Chihana says there is an urgent need for the new government in September to focus on the economic hardships Malawians have been subjected to by the Chakwera -led government citing deep concerns over rising economic problems and governance challenges. He was reacting to the World Bank Report that has indicated that the Malawi economy is in ICU; struggling on multiple fronts. According to the Report, titled “Navigating Uncertainty” it says the growth of the economy is at the tortoise pace, the economy is tumbling, prices of basic needs are rising and millions of Malawians are scrambling to make ends meet due to poor leadership. In his quick response, Chihana says September 16 is the defining day for Malawians to address the myriad of challenges they are facing under President Dr Lazarus Chakwera. “AFORD and other well meaning opposition parties are here to rescue the sinking boat. This government has not only deepened poverty across the country, but it has also set new records in wasteful spending and corruption. At a time when millions of Malawians are struggling to survive, government officials mainly the elites in ruling the Malawi Congress Party-MCP are living in excess and approving for each other’s budgets to travel abroad at the expense of the common poor Malawian. So a pity,” said Chihana. The report from the World Bank has come at the time Malawians go to the polls in September and it reinforced opposition messages on the economy. According to the report, it also indicates that Malawians are going through hunger crisis as maize production which is the main staple food will be in deficit and the limited foreign reserves means importing of relief food and fertilizer will be limited as well. The report also says the government overspent its budget in 2024/25, pushing the deficit to 10.5% of GDP and that in the coming fiscal year, debt repayment alone will eat up half of all tax revenue, leaving less money for service delivery mainly in critical areas of education, health and agriculture. The bank has since urged urgent intervention to stabilize the economy, support local producers, and defend the poor families and it has warned that if nothing is done, Malawians are expected to be unredeemable people. With less than 60 days before elections, many Malawians see the current leadership as not delivering on their key promises to improve the country’s ailing economy, food security, and corruption. Chakwera’s reelection bid is jeopardy as his government is very unpopular with the inflation crisis.

A Tanzanian conglomerate Bakhresa Malawi Limited has added soya beans oil production to their line of businesses raising a prospect of consumers spending less on cooking oil which saw prices of the commodity soaring in recent years. The company has disclosed that it has spent 100 US dollars to set up the factory and it is determined to become the country’s leading oil producer to meet local demand According to Richard Tchereko, the company’s human resource and compliance manager, the company had met MBS requirements and it received pre-qualification certificate to start production. Tchereko further said with adequate raw material supply, the company will be producing 500 tonns of soya beans per day which very significant and he has encouraged local farmers to take advantage of the situation by growing and supplying more soya beans to Bakhresa Business gurus and economic experts have hailed the establishment of the oil company which among other things, will create jobs and save forex as the product will be produced locally using local raw materials. President Lazarus Chakwera presided over the official opening of the company on Wednesday in Limbe and stressed the need for Malawians to invest in the country  

IMF Press Release number 25/175 published on its official website page in Washington, DC on Wednesday, 4th June, 2025 states that an International Monetary Fund (IMF) team led by Justin Tyson visited Malawi from May 22 to June 3 to hold meetings with the Malawian authorities and other counterparts from the public and private sectors and civil society for the 2025 Article IV consultation. Discussions focused on policies to restore macroeconomic stability, and the structural reforms needed to foster strong, inclusive, and durable growth. Below is the brief report of the mission to Malawi by IMF Staff which has ceen completed in 2025. Context, Macroeconomic Outlook, and Risks The Malawian economy has been buffeted by several shocks. Real GDP growth declined slightly to 1.8 percent in 2024 as a drought affected agricultural production, while foreign exchange and fuel shortages dampened economic activity. Over 20 percent of the population is facing high levels of food insecurity, up five percentage points over 2023. Headline inflation began easing in late-2024 and reaccelerated in early-2025 in the context of maize prices rising to historical levels, elevated money growth and an increasing official-parallel exchange rate spread. Fiscal and monetary policy has remained too accommodative. The FY2024/25 (April/March) fiscal balance fell short of budget targets and deteriorated relative to the previous year as revenue underperformed and expenditure ceilings were exceeded. Persistent and elevated domestic fiscal financing has fueled money growth and inflation, which in turn exerts pressure on the exchange rate. Monetary policy did not tighten sufficiently in the context of elevated government domestic borrowing. The broader reform momentum has been slowing. Consequently, domestic, and external imbalances worsened. The current account deficit expanded further to about 22 percent of GDP and gross reserves are critically low, pointing to an overvalued exchange rate. The official-parallel spread is wide and may reflect other factors beyond fundamentals. Malawi remains in external debt distress and domestic debt is growing. The macroeconomic outlook is subdued and dependent on the agricultural sector output and foreign grant support. Under current policies, the mission expects real GDP growth to be 2.4 percent in 2025 and gradually increase to 3.4 percent over the medium term. Inflation is projected to average 29 percent in 2025 and settle at around 14 percent over the medium term. The current account deficit is projected to improve to about 17 percent of GDP in 2025 based on lower fuel prices and a rebound in key exports. General elections, scheduled for September, have reinforced political-economy constraints to macroeconomic adjustment. After the expiry of the ECF arrangement, the Malawian authorities are designing a homegrown reform program. Risks are tilted to the downside. Lower-than-anticipated grant inflows and food production, additional global trade tensions, and delayed reforms could deepen macroeconomic instability. Greater-than-expected mining investment and production constitute an upside risk. Fiscal Policy Returning to a sustainable fiscal adjustment path is a priority. Tackling the rising interest bill will create space for domestically-financed investment and pro-poor spending, while also ameliorating the sovereign-bank nexus. Domestic revenue mobilization is urgently needed to achieve fiscal sustainability in an equitable way. This could be achieved through a combination of broadening the tax base and tax policy instruments (e.g., reducing exemptions, and personal and corporate income tax reform). Improving wage bill efficiency and rebalancing expenditures towards human capital and social protection could support these efforts. Staff welcomes public financial management improvements, which remain critical for strengthening fiscal governance and building public trust. The authorities have made progress in expanding the coverage of the Integrated Financial Management and Information System (IFMIS), bank reconciliations, and increasing the efficiency of public investment. Reform efforts should continue to, inter alia, enhance budget development, execution, and reporting, improve the procurement system, and strengthen State Owned Enterprises (SOE) oversight. Decisive steps are needed to restore debt sustainability. The authorities have achieved some progress with their bilateral creditors and continue to engage with their external commercial creditors to ensure that external debt is sustainable. Tangible progress on external debt restructuring could pave the way for new concessional inflows. This should be supported by steps to reduce the cost of domestic borrowing. Price Stability and Exchange Rate Policy Tighter fiscal and monetary policies would support disinflationary efforts and ease pressure on the exchange rate. High inflation hurts the economy in general, but especially the poorest and most vulnerable. A combination of more restrictive monetary policy and an urgent fiscal adjustment, including enhanced reporting on budget execution, could reduce broad money growth, support policy credibility and re-anchor inflation expectations. Structural constraints may also be contributing to entrenched inflation expectations. A unified and market clearing exchange rate is critical to reducing imbalances and supporting the authorities’ growth objectives. The current regime with a large and volatile spread between the parallel and official rate creates distortions, impedes exports, subsidizes some imports, and encourages informality and tax avoidance. Foreign direct investments and official aid flows are discouraged, and domestic revenues reduced. Eliminating these imbalances requires unifying the official and parallel exchange rates, at a level reflecting fundamentals and discounting speculative factors, and stabilizing the foreign exchange market. Consistency between the de facto exchange rate regime, the monetary policy framework and fiscal policy are needed to ensure sustainable growth. Financial Sector Policies The banking sector’s credit and foreign exchange risks should be monitored to preserve financial stability. While the sector is well-capitalized, liquid, and profitable, its significant exposure to government borrowing and the net foreign liabilities position within the banking sector require continued careful monitoring. Increased banking sector credit to the private sector would support economic growth. Fiscal adjustment would reduce crowding out of private sector due to public borrowing and support export-oriented investment. In addition, a lower inflation and interest rate environment would further support credit to businesses. Structural Reforms Improving the investment climate would help attract investment, diversify the economy, and move up the value chain. Sustained multi-year prudent fiscal policies and removing price distortions (e.g., re-activating the automatic fuel price mechanism) would bolster policy credibility and strengthen external competitiveness. Addressing key structural impediments to growth would durably support efforts to raise productive capacity, reduce inflation and improve self-sustainability, as envisaged under the authorities’ Agriculture, Tourism, Mining and Manufacturing (ATMM) policy umbrella. Further strengthening governance measures will support confidence in public service provision. Despite government reform efforts, including the two National Anti-Corruption Strategies, gaps persist. For example, the public procurement process and SOE operations would benefit from greater transparency and less discretionary decision-making. The IMF mission team thanks the Malawian authorities and all other interlocutors for the candid discussions and their hospitality. follow the link provided IMF Staff Completes 2025 Article IV Mission to Malawi