LILONGWE, December 9, 2025-Malawi can restore confidence in public finances, protect the vulnerable, and unlock private capital investment to support the ambitions of "Malawi Vision 2063" through a credible reform package anchored around fiscal consolidation, according to a recent Public Finance Review report by the Word Bank Group.
The Public Finance Review, PFR report titled Restoring Stability, Rebuilding Trust is a forward-looking assessment of the country's public finances. It notes that Malawi is at a critical juncture due to persistent and rising fiscal imbalances, high inflation, and mounting debt that have constrained economic and social development outcomes. The report highlights an acute macro-fiscal crisis marked by one of the region's highest fiscal deficits (averaging 11.9 percent of GDP over 2022-24), and a public debt burden approaching levels last seen before the HIPC completion point in 2006.
Budget rigidity is severe, with wages, debt service, pensions and gratuities, and statutory transfers absorbing nearly all domestic revenues and crowding out priority development spending. Public financial management of government investment projects and procurement face bottlenecks. Delays in rolling out the Integrated Financial Management Information System IFMIS, and e‑GP systems hinder expenditure efficiency, while weak project appraisal and selection processes result in low‑quality investments. Climate vulnerability and disaster recovery needs continue to add pressure, and social sectors-education, health, and social protection-are underfunded and rely heavily on the declining external financing.
The mining sector, according to the report, has significant potential to boost Malawi's public finances but is unlikely to result in an excessive revenue windfall. Seven projects producing energy transition minerals could generate between US$200 million and US$ 500 million in annual revenues by the early 2030s, but this depends on the operations of those projects and on the fiscal terms agreed with investors.
"This review lays out a practical roadmap to stabilize public finances fairly, while accelerating inclusive growth. With sustained government leadership and broad stakeholder support, Malawi can turn a difficult moment into a springboard for reform-protecting essential services, strengthening institutions, and crowding in private investment," said Firas Raad, World Bank Group Country Manager for Malawi.
To rebuild trust and restore stability, the report calls for a balanced fiscal consolidation that safeguards essential social and infrastructure spending while improving efficiency across government. On the revenue side, it recommends rationalizing tax incentives, removing non-essential VAT exemptions, and accelerating digitalization to strengthen compliance. The report underscores the importance of completing IFMIS optimization and enhancing Parliamentary oversight to reinforce transparency and expenditure control. Over time, strengthened debt management will be critical to reducing vulnerabilities and restoring fiscal space.
