Th e E c o n o m i c s Association of Malawi (Ecama) has called for urgent fiscal discipline, export-led recovery, and reform of foreign exchange markets to avert a deeper balance-of-payments crisis.
The recommendations follow the latest International Monetary Fund (IMF) statement which shows that Malawi’s net international reserves (NIR) are projected to fall to negative $2.03 billion (about (K3.55 trillion or 18.9 percent of GDP) by the end of 2025.
The Fund projects that the country’s net international reserves—what the Reserve Bank can actually use after deducting liabilities—will deteriorate from –$1.02 billion in 2023 to –$2.03 billion in 2025. Gross official reserves are expected to fall to just $118 million by the same year, covering less than two weeks of imports.
According to the Fund’s estimates, Malawi external debt is also expected to reach 31.6 percent of gross domestic product (GDP) by the end of the year. Bloomberg reported that part of that total includes almost $500 million owed to Afrexim Bank and nearly $400 million with the Trade and Development Bank.
Ecama President Bertha Bangara-Chikadza said restoring macroeconomic stability will require a combination of monetary tightening to curb speculation and long-term investment in export growth.
She cautioned that the widening trade gap is fuelling forex shortages, driving transactions underground, and worsening inflationary pressures.
“In May 2025, imports were nine times higher than exports,” she said. “The exchange rate imbalance is distorting markets and weakening household purchasing power. To fix this, we need targeted monetary policy in the short term and sustained export promotion in the long term.”
The Ecama head said the government must also act
credibility in fiscal and monetary governance. While Malawi has legal frameworks such as the Public Finance Management Act in place, poor implementation continues to erode donor and investor confidence.
She cited persistent concerns about fiscal indiscipline and public resource misuse as key contributors to the current debt crisis.
A significant part of restoring market confidence, she added, is stabilising the foreign exchange
market by making formal channels more attractive than the thriving parallel market.
“Ensuring that most forex transactions happen officially is critical to improving liquidity and investor trust. Curbing illegal trading must go hand in hand with making formal systems efficient and reliable.”
The IMF has also flagged Malawi’s debt as unsustainable, with total public debt reaching 88 percent of GDP by the end of 2024. Interest payments alone are consuming nearly seven percent of GDP, further crowding out essential spending.
Speaking at a press briefing on July 23, IMF communications director Julie Kozack said Malawi’s post-Hipc debt rebound signals a failure to maintain discipline after past relief efforts.
“We continue to urge the authorities to take decisive steps to restore public debt sustainability. Completing an external debt restructuring and addressing the high cost of domestic borrowing are both essential,” she said.
The Fund is also pressing Malawi to abandon its fixed exchange rate regime in favour of a market-clearing system. Since April 2024, the kwacha has been pegged against the US dollar, reversing gains from the November 2023 devaluation and widening the spread between official and informal market rates.
While the IMF projects a moderate rise in GDP growth to 2.4 percent in 2025, it warns that persistent inflation, fiscal deficits, and electoral risks could derail recovery. For Ecama, the path forward is clear: anchor policies in realism, rebuild trust, and commit to a serious export growth strategy.
“The time for paper reforms has passed,” said Bangara-Chikadza. “What is required now is political will and credible implementation
