Key Business Points
- The incoming DPP administration in Malawi faces urgent economic choices to restore fiscal discipline and credibility, with a need for tighter expenditure management, realistic budgets, and transparent debt practices.
- Economic reforms should be linked to strategic investments in agriculture, energy, and digital infrastructure to stabilize growth, create jobs, and raise productivity.
- The new administration must act swiftly to rebuild reserves, stabilize inflation, and broaden the tax base without overburdening compliant taxpayers, to avoid derailing prospects for recovery and inclusive growth.
The Economics Association of Malawi (Ecama) has cautioned that the incoming Democratic Progress Party (DPP) administration faces critical economic decisions that will impact the country’s recovery and growth prospects. According to Ecama president Bertha Bangara-Chikadza, the past five years have been marked by persistent fiscal deficits, mounting public debt, foreign exchange shortages, and surging inflation, which have eroded household welfare. The inflation rate, in particular, has increased by over 20 percentage points between December 2020 and December 2024, pushing more Malawians into poverty.
Bangara-Chikadza emphasized that rhetoric must give way to real reforms in public finance management, including tighter expenditure management, realistic budgets, and transparent debt practices. This, she said, is essential to restore investor confidence and stimulate growth. Economist Christopher Mbukwa echoed this sentiment, stating that economic reforms should be linked to strategic investments in agriculture, energy, and digital infrastructure, which have huge potential to stabilize growth, create jobs, and raise productivity.
Mbukwa also stressed the need for the new administration to rebuild reserves, stabilize inflation, and broaden the tax base without overburdening compliant taxpayers. Scotland-based Malawian economist Velli Nyirongo urged the new government to act decisively to restore confidence, warning that failure to pursue reforms will leave Malawi exposed to external shocks and deepen its reliance on commodities.
The World Bank’s July 2025 Malawi Economic Monitor report highlighted the country’s narrow fiscal space, with a deficit widening to 10.5 percent of gross domestic product, equivalent to K720.4 billion, which is well above the approved seven percent. This fiscal deficit poses a significant challenge to the new administration, which must balance the need for economic growth with the need for fiscal discipline. As Malawian entrepreneurs and business owners look to the future, they will be watching closely to see how the new administration navigates these challenges and creates an environment conducive to kugwiritsa ntchito (job creation) and kulima bizinesi (business growth).
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