Economics Association of Malawi (Ecama) has urged government to shift from broad-based spending to targeted and high-impact investments, warning that without difficult trade-offs the economy risks failing to deliver meaningful gains.
Ecama president Bertha Bangara-Chikadza said in an interview on Friday that Malawi has entered a phase where limited fiscal space and rising debt leave little room for inefficiency, making spending choices not spending levels the defining factor of the economy’s success.
“With the current constraints, government must prioritise productive sectors such as energy, irrigation, mining and manufacturing,” she said, noting that these areas are critical for easing foreign exchange shortages and driving sustainable growth.
Bangara Chikadza, who teaches economics at the University of Malawi, added that continued investment in education and skills development remains essential, but emphasised the need to rebalance spending away from less productive areas.
“Government must begin reducing subsidies, which carry high fiscal costs with limited long-term productivity gains,” she said, cautioning that the rapid expansion of decentralised spending, particularly the allocation of K5 billion per constituency should be matched with strong oversight and implementation capacity.
Bangara-Chikadza was referring to the revamped Constituency Development Fund, which was increased by 1 858 percent from K88.6 billion in the 2025/26 financial year K1.14 trillion in the current fiscal year that ends on March 31 2027.
National Planning Commission (NPC) data show that local councils now manage 33.7 percent of the total development budget, a jump from 3.3 percent in the previous financial year.
The data further indicate that of this, 72 percent or K824 billion, is allocated to construction and rehabilitation, with the remainder supporting district-wide projects, education bursaries, project management and women and youth empowerment.
Bangara-Chikadza’s remarks come come against a challenging macroeconomic backdrop, with growth averaging just 2.3 percent over the past five years, which is well below national targets of six percent while inflation remains elevated above 20 percent with foreign exchange reserves hovering around 2.2 months of import cover or roughly $520 million (about K910 billion).
Public debt, on the other hand, has risen to about 91 percent of gross domestic product (GDP), with debt servicing absorbing a significant share of government revenue and limiting space for development spending.
Scotland-based Malawian economist Velli Nyirongo in an interview on Friday said structural challenges, including weak tax collection, high debt and pressure on recurrent expenditure, remain largely unresolved, raising concerns about the budget’s ability to deliver sustained change.
He said the government’s plans remain exposed to external shocks, particularly global fuel prices and exchange rate movements.
Said Nyirongo: “If global fuel prices rise, the cost of imports goes up, putting pressure on inflation and public spending.
“At the same time, a weaker exchange rate raises the cost of foreign debt and imported goods.”
Economists say these vulnerabilities reinforce the need for disciplined fiscal management and strategic allocation of resources.
