By Burnett Munthali
Malawi’s fiscal deficit has narrowed to 8.8 percent of Gross Domestic Product (GDP) in the 2025/26 financial year, signalling some improvement in the country’s public finances amid continued efforts to control spending and increase domestic revenue.
This is contained in the latest Malawi Economic Monitor by the World Bank, which attributes the improvement to expenditure controls, tax reforms and stronger revenue administration.
Finance Minister Joseph Mwanamvekha has welcomed the assessment, saying it reflects progress in government’s efforts to restore fiscal discipline and strengthen the management of public finances.
Mwanamvekha sayt the narrowing deficit and adherence to the approved budget demonstrate that measures being implemented by government are beginning to produce results.
“I want to thank the World Bank for this candid and balanced report. It confirms that the tough decisions we have been making are beginning to bear fruit,” he said.
Mwanamvekha: I want to thank World Bank
The minister has also praised the Malawi Revenue Authority (MRA) for measures aimed at increasing domestic revenue, including reforms in tax administration and the expansion of electronic invoicing.
The World Bank report says improved revenue collection and expenditure controls have helped strengthen Malawi’s fiscal position.
However, the report has citied continued challenges facing the country’s public finances, particularly the high cost of servicing government debt.
The report says large interest payments continue to consume a significant share of government revenue, leaving fewer resources for development programmes and social services.
Mwanamvekha says government will therefore maintain its focus on fiscal discipline while working to reduce reliance on expensive domestic borrowing.
He says the measures will help create fiscal space for development and support private-sector growth.
“Our focus now is to ensure that this discipline is sustained and that Malawians feel the benefits through lower inflation, stable prices, and more resources for development,” says Mwanamvekha.
The latest figures provide a measure of progress in government’s fiscal consolidation efforts, although the World Bank’s assessment shows that Malawi still faces significant pressures in managing its finances.
