IMF praises Malawi reforms but holds off on new financing deal

An International Monetary Fund team has concluded two weeks of talks in Malawi without reaching a final agreement on a new lending programme, though it praised the government’s progress on economic reforms.

The mission, led by Justin Tyson, the IMF’s mission chief for Malawi, held meetings in Lilongwe from 22 September to 6 October to discuss a possible arrangement under the Fund’s Extended Credit Facility.

In a statement issued at the end of the visit obtained by Nyasa Times, the IMF said Malawian authorities had been “implementing strong reforms to tighten fiscal discipline, reduce the public debt burden, and improve how markets function,” adding that these provided “a good foundation for an IMF-supported program.”

The Fund pointed to rising domestic revenue and controlled spending under the government’s National Economic Recovery Plan, in line with targets set in the 2026/27 budget.

It also highlighted recent reforms to fuel and sugar pricing, which it said had helped improve how markets function.

On inflation, the mission said price growth had eased in recent months due to lower food inflation, but noted that non-food inflation remained high.

The Fund was more cautious about growth, saying Malawi’s economy faced a “challenging environment” due to climate shocks and falling demand for tobacco, the country’s main export.

It also pointed to pressures linked to global trade disruptions caused by the war in the Middle East.

The mission stopped short of announcing a finalised deal.

The statement said authorities and IMF staff had made “considerable progress” in designing a package of policies that could underpin a loan programme, but that talks would continue.

Any agreement would still need to be approved by IMF management before being presented to the Fund’s Executive Board for a final decision.

Malawi has been without a functioning IMF programme since its previous arrangement lapsed in May 2025.

The country has faced a severe foreign exchange shortage, fuel supply problems and a large gap between official and black market exchange rates in the months since.

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