By Binton Mulamba
After several years of economic turmoil, Malawi is beginning to register measurable signs of economic adjustment under Professor Arthur Peter Mutharika, with the latest World Bank Malawi Economic Monitor pointing to progress in fiscal management, domestic revenue mobilisation, agriculture and food prices, among other areas.
The September 2026 World Bank Malawi Economic Monitor report, titled “Building Stability to Unlock Growth,” says the new government has made meaningful progress since taking office, with early reforms beginning to yield tangible results.
One prominent indicator is the improvement in fiscal management. The fiscal deficit narrowed to 8.8 percent of GDP in the 2025/26 financial year, representing a reduction of 1.7 percentage points from the previous year.
The improvement was supported by expenditure rationalisation, stronger revenue collection and other fiscal measures introduced by the administration.
The report also records a significant improvement in budget discipline, which was lacking during the previous regime. For the first time since 2021, budget execution remained within the expenditure envelope approved by Parliament at the beginning of the financial year. Total expenditure also fell below the revised mid-year ceiling, indicating tighter control over public spending.
The World Bank further indicates that the primary deficit also declined substantially, falling by 3.3 percentage points of GDP compared with 2024/25.
This represents an important shift in fiscal management as government seeks to restore spending discipline and reduce pressure on public finances.
There have also been notable strides by the Mutharika administration in mobilisation of domestic revenue, which the Bretton Woods institution rates as strong.
The report notes that domestic revenues increased to 18.6 percent of GDP in 2025/26, while tax revenues reached 16.8 percent of GDP, broadly in line with the Sub-Saharan average. The Bank attributes the improvement to stronger income tax receipts, better collection of taxes on goods and services, higher non-tax revenues, including dividends from parastatals, and the expansion of electronic invoicing.
Debt accumulation is also easing as government slows down on borrowing.
The World Bank reports that domestic debt accumulation is slowing, while reduced government borrowing is contributing to lower yields on government securities. This development is relevant to efforts to create greater stability in the domestic financial environment.
Agriculture has also provided another area of positive movement. Maize production increased by about 15 percent in the 2025/26 season, rising from approximately 2.8 million tonnes to about 3.3 million tonnes. Total staple grain production is projected at around 3.7 million tonnes, pointing to a modest national surplus.
The increase in staple grain production has been accompanied by a sharp decline in monthly maize prices during the first half of 2026. Lower maize prices have helped ease food insecurity and reduced pressure on low-income households.
The report further indicates that acute food insecurity improved significantly compared with the previous two years.
Malawians will recall days when prices of maize, the staple food, skyrocketed beyond the reach of the majority. At one point, a 50-kilogram bag of maize was selling at K100,000.
Inflationary pressures have also shown signs of easing. The World Bank notes that declining food prices and slower money-supply growth have helped contain inflation. Average inflation, which was around 28.4 percent in 2025, is projected to moderate to about 23 percent in 2026.
The report also highlights that the financial sector has remained broadly sound, while private-sector credit has expanded. Credit to the private sector increased from approximately MWK1.827 trillion in June 2025 to MWK2.360 trillion in June 2026. Community and social services, agriculture and manufacturing together absorbed more than 70 percent of total private-sector credit, indicating continued financing activity in productive and service sectors.
The report also records some positive human development indicators.
“Adult literacy improved from about 74 percent to 79 percent, while youth literacy was close to 90 percent. The national poverty rate also declined from 50.7 percent to 47.3 percent, although the report notes that food poverty and inequality remain significant concerns and that regional differences continue to be substantial,” it reads.
Another important element is the National Economic Recovery Plan which the Mutharika administration launched late last year to facilitate a quick economic turnaround.
The World Bank identifies strengths in the plan’s broad cross-government coordination, comprehensive sectoral coverage and results-oriented monitoring framework aligned with Malawi 2063. These features provide a framework for coordinating economic recovery measures and tracking implementation across sectors.
Taken together, the indicators in the latest Malawi Economic Monitor point to measurable areas of economic adjustment since the new administration took office. Fiscal consolidation, improved revenue collection, tighter expenditure control, stronger maize production, falling maize prices, easing inflationary pressures and increased private-sector credit are among the developments highlighted.
For the Mutharika administration, the figures provide a set of measurable indicators against which its economic reform programme can be assessed as implementation continues.
The World Bank’s assessment provides hope and sends positive signals to the global financial system that Malawi is moving past difficult times and is ready for steady growth.
