No Deal Yet as IMF Praises Malawi Economic Reforms

An International Monetary Fund team concluded two weeks of talks in Lilongwe without reaching a final agreement on a new lending programme, though officials praised the government’s progress on economic reforms, Nyasa Times reported.

Discussions regarding a prospective deal through the Fund’s Extended Credit Facility took place in the capital between 22 September and 6 October, steered by Justin Tyson, the IMF mission chief for Malawi. Malawi has been without a functioning IMF programme since its previous arrangement lapsed in May 2025.

Malawi Implements Reforms to Tighten Fiscal Discipline

During the two-week visit, Malawian authorities implemented strong reforms to tighten fiscal discipline, reduce the public debt burden, and improve how markets function, according to an IMF statement obtained by Nyasa Times. The Fund noted that these actions provided a solid foundation for an IMF-supported programme.

The mission pointed to rising domestic revenue and controlled spending under the government’s National Economic Recovery Plan, aligning with targets set in the 2026/27 budget. Recent adjustments to fuel and sugar pricing also helped improve market functionality.

High Non-Food Inflation and Falling Tobacco Demand Pressure Economy

While price growth eased in recent months due to lower food inflation, the IMF mission noted that non-food inflation remained high across the country. The Fund adopted a cautious stance on overall economic growth, citing a challenging environment shaped by climate shocks and falling demand for tobacco, which serves as Malawi’s main export.

Global trade disruptions linked to the war in the Middle East added further economic pressures. Ever since the earlier IMF pact expired, the nation has grappled with an acute scarcity of foreign currency, difficulties with fuel availability, and a wide disparity between official currency rates and those on the black market.

Executive Board Approval Process

Although the mission stopped short of announcing a finalised deal, authorities and IMF staff made considerable progress in designing a package of policies to underpin a loan programme, with talks slated to continue. Any future agreement requires approval from IMF management before being presented to the Fund’s Executive Board for a final decision.