Malawi Budget Faces Strain as Growth Projections Fall

The 2026/27 national budget of Malawi is under significant pressure three months after Finance Minister Joseph Mwanamveka unveiled the K11tn recovery plan in February. While the government initially projected 4.1% economic growth and a drop in inflation to 15%, the World Bank Group has since reduced the growth projection to 2.3%, and inflation is now expected to remain above 20%.

Public debt is projected to hit 92.3% of GDP, with debt servicing consuming approximately half of all domestic revenue. The Malawi Revenue Authority reported exceeding its first-quarter revenue target by K20bn, but the broader economy continues to struggle with high costs for transport and medicine alongside foreign exchange shortages.

Sosten Gwengwe, chairperson of the Budget and Finance Committee, described the budget's macroeconomic foundations as "very weak and shaky" due to these revised projections. Additionally, the President of the Economics Association of Malawi, Bertha Bangara-Chikadza, noted that the government's reliance on domestic borrowing is stifling private sector investment by encouraging banks to prioritize state lending over business loans.