In a move akin to desperate situations demand desperate measures, the Malawi Government has unveiled austerity measures aimed at cutting public spending and restoring fiscal discipline for the remainder of the 2025/26 financial year.
Unveiling the measures yesterday through a directive to all ministries, departments and agencies (MDAs), Chief Secretary to the Government Justin Saidi said the measures include a freeze on staff recruitment, suspension of promotions without Treasury approval and a full moratorium on the purchase of new government vehicles and other high-value assets.
He said fuel entitlements for Cabinet ministers, deputy ministers and senior public officers have also been cut by 30 percent as part of the cost-saving drive.
Further, under the new rules, foreign travel will be restricted, with all trips requiring presidential approval through the Chief Secretary as delegation sizes will be capped while donor-funded travel will not receive any government top-up allowances.
The government has also ordered MDAs to shift meetings and workshops to office premises or use virtual platforms to reduce travel-related costs.
Procurement processes will also now be strictly tied to quarterly Treasury allocations, with suppliers allowed to deliver goods and services only upon receiving Integrated Financial Management and Information System—generated Local Purchase Orders.
The government has also announced a review of all mining licences, revoking those idle for more than five years and a reduction in embassy staff to five officials.
In an interview yesterday, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said the measures are meant to reduce public expenditure and create more fiscal space for government to use for other important development priorities.
He said while the impact may not be immediate, the decision to cut expenditure has not been influenced by any donor or cooperating partner, but was rather seen as a necessary thing to do in the circumstances.
Said Mwanamvekha: “Eventually, there will be huge cuts on our expenditure and also these are not the only measures as we will take some administrative and economic measures as we are working on addressing both fiscal monetary and foreign exchange rate policies.
“This is also an indication that government of President Professor Arthur Peter Mutharika is serious about addressing the challenges that the Malawi economy is facing and ensure it is back on track.”
Compared to previous years, the government’s expenditure continues to grow at a faster pace of 35 percent than revenue at 21 percent.
In the 2025/26 fiscal year, total public expenditure is pegged at K8.1 trillion, an equivalent of 31.1 percent of gross domestic product (GDP) against revenues and grants of K5.6 trillion or 21.5 percent of GDP.
This translates to a budget deficit of K2.5 trillion (9.6 percent of GDP), which is 1.2 times higher than K2.1 trillion incurred in 2024/25.
Budget deficits are contributing to the growth of total public debt, which stood at K16.2 trillion as of September 2024.
The increase in budget deficit has largely been driven by statutory expenses, notably wages and salaries, public debt interest payments and pensions. They have collectively increased by 33 per cent from the 2024/25 budget.
Together, statutory payments absorb 89 percent of domestic revenue and 33.2 percent of total government expenditure in 2025/26 financial year.
During the year under review, wages and salaries are estimated at K1.53 trillion, representing an increase of 20 percent from a 2024-25 revised figure of K1.28 trillion. The increase is mainly on account of salary adjustment and recruitments.
Ironically, a Unicef analysis showed that the Malawi Government is spending more on public debt servicing surpassing the combined share allocated to education and health since 2024/25.
Debt servicing costs increased by 1.5 times from K1.4 trillion in 2024/25 to K2.2 trillion in 2025/26, absorbing 50 per cent of domestic revenue and 27 percent of total government expenditure compared to education (16.6 percent), health (9.5 per cent) and social protection (2.7 percent).
In a separate interview, Economics Association of Malawi president Bertha Bangara-Chikadza yesterday welcomed the government’s decision to suspend recruitment and reduce external travel, saying it is a right austerity measure to control expenditure and the recurrent budget which has been growing over the years.
She said if fully implemented, the measures could help improve the fiscus by reducing growth of recurrent expenditures and easing pressure on the budget, which could help reduce government consumption and limit domestic borrowing, contributing to overall macroeconomic stability.
Said Bangara-Chikadza: “Suspending recruitment of extra people may stop the wage bill from increasing and give time to the government to make investments in other productive sectors and create more space for recruitment with available resources.
“However, implementation must not affect service delivery in critical sectors such as the health and education sectors.”
Economist Bond Mtembezeka said given the fiscal pressures from public debt and inflation, these measures are welcome and have come at the right time.
“Of course, priority should go to recruitment of key and strategic personnel,”he said.
In May this year, the International Monetary Fund (IMF) maintained that poor fiscal discipline cost Malawi the four-year $175 million (about K306 billion) Extended Credit Facility (ECF) which automatically terminated due to lack of review.
The IMF argued that fiscal discipline proved difficult to maintain in the current environment due to elevated spending pressures and insufficient revenue mobilisation efforts.
