Mutharika sets bold path for economic recovery amid fiscal turmoil

President Arthur Peter Mutharika has unveiled an ambitious recovery blueprint to rescue Malawi’s struggling economy, pledging to restructure national debt, engage international financiers, and restore fiscal discipline after years of instability marked by soaring inflation and public debt.

Speaking during the official opening of the 52nd Session of Parliament and the 2025/2026 Mid-Year Budget Review Meeting in Lilongwe, Mutharika said his administration has already begun engaging creditors on debt treatment, while mobilizing more grant financing to ease the country’s liquidity crisis and stimulate growth.

“My Administration has already started taking steps to deal with the prevailing undesirable situation by engaging financiers on debt treatment and raising more financing through grants, among others,” said the President.

He acknowledged that all major macroeconomic indicators are misaligned, describing the current economic situation as one of the worst in recent memory. Inflation, he noted, has jumped to 28.2 percent from 8.6 percent in 2020, while total public debt has ballooned from K4.1 trillion to K21.6 trillion over the same period. The national deficit now stands at K2.4 trillion, up from K558.9 billion in 2020.

Weak Growth and Fiscal Pressures

The President attributed the weak economic performance to low agricultural productivity, supply chain constraints, and limited industrial capacity, with GDP projected to grow by 2.8 percent in 2025, up slightly from 1.7 percent in 2024.

He admitted that government revenues have underperformed, making it difficult to implement key programmes and investments. However, he pledged to pursue a comprehensive fiscal reform agenda anchored on transparency, debt sustainability, and prudent spending.

“If we get the economy right, we get everything else right,” he told Parliament. “A growing economy will create more jobs for the youth and women, and restore dignity for Malawians.”

Debt Reform and Expenditure Control

To curb fiscal pressures, Mutharika said his administration will prioritize debt restructuring and expenditure rationalization, with a renewed focus on domestic resource mobilization.
He emphasized that future borrowing will target productive sectors that can yield returns and support job creation, particularly in agriculture, mining, and manufacturing.

Economic observers say the government’s commitment to engaging international creditors could help unlock concessional financing and rebuild investor confidence—if accompanied by strong governance and accountability measures.

Restoring Public Confidence

The President also tied fiscal recovery to good governance, pledging to empower the Anti-Corruption Bureau (ACB) to prosecute corruption cases “without fear or favour,” and to stop all unbudgeted recruitments and unprocedural promotions in the civil service.

“Good governance and rule of law will be very key,” he stressed. “I will not tolerate any corruption.”

A Call for Collective Effort

Mutharika called for unity and collective responsibility among leaders to rebuild the nation’s economy, urging Members of Parliament to put national interests’ above personal ambition.