Almost nine months after Malawian President Peter Mutharika returned to power, his administration finds itself grappling with a severe and protracted economic crisis. The government faces the urgent challenge of restoring foreign exchange reserves, managing a growing external debt burden, reducing inflation and addressing chronic food insecurity.

When Malawi’s sixth president, Lazarus Chakwera, assumed office in 2020 after defeating Peter Mutharika in a

court-ordered presidential election rerun,

he pledged to rebuild the battered economy, create one million jobs for young people and root out systemic corruption in the civil service. His broader promises of wealth creation, entrepreneurship, good governance and food security, however, fell short of expectations.

By 2025, the election year, the

Tonse Alliance

— a coalition of nine political parties — had effectively collapsed. Seven parties withdrew from the alliance, citing corruption, nepotism and a lack of clear policy direction within the Chakwera administration. The coalition had also been shaken by the death of Vice President Saulos Chilima in a plane crash in June 2024.

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As Chakwera’s term drew to a close, critics accused his administration of indecisiveness in the face of mounting economic challenges. Procurement scandals, allegations of nepotism and elite capture were widely cited as factors that allowed corruption to flourish, undermining efforts to stimulate economic growth.

The economy also suffered significant external shocks. Global supply chain disruptions following the Russia-Ukraine war drove up the cost of imports, while successive climate-related disasters devastated agricultural production.

Tropical Cyclone Freddy

caused widespread flooding and mudslides that affected more than 2.2 million people in southern Malawi, compounding the country’s recovery from

Tropical Storm Ana

and

Tropical Cyclone Gombe.

Opposition parties, led by Mutharika’s Democratic Progressive Party (DPP), together with civil society organisations, criticised the Chakwera administration for excessive government spending, rising public debt and its handling of the International Monetary Fund’s Extended Credit Facility (ECF), which lapsed in May 2025.

In a statement issued on 16 May 2025, Reserve Bank of Malawi Governor Dr McDonald Mwale said: “The Reserve Bank of Malawi acknowledges the mutual decision by the Government and IMF to allow the ECF programme to lapse. This reflects ongoing fiscal and external challenges but does not signal a shift in Malawi’s commitment to sound macroeconomic management.”

On 9 November 2023, the Reserve Bank of Malawi announced a

44 percent devaluation of the Malawi kwacha

. The central bank said the move was intended to allow the exchange rate to adjust to a market-clearing level and better reflect underlying market fundamentals.

Defending the decision, former Minister of Finance Simplex Chithyola argued that the overvalued kwacha had discouraged local production.

“If people find it cheaper to import goods than to buy locally produced products and services, it is a sign that the exchange rate is misaligned,” he said. “If this had continued, the long-term consequence would have been the collapse of local production and the transformation of Malawi into a dumping ground for cheap imported goods that add little value to our economy.”

Resuscitating the

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Malawi’s President Peter Mutharika

Reviving the economy will be a formidable task. The Mutharika administration hopes to stabilise the kwacha, restore reliable supplies of fuel and foreign exchange, and create employment opportunities. Progress could be strengthened if negotiations with the IMF result in a new Extended Credit Facility programme.