The International Monetary Fund (IMF) has terminated Malawi’s $175 million loan agreement after no performance review was completed during the past 18 months, the Fund announced on Wednesday.
The four-year Extended Credit Facility (ECF), approved in November 2023, was intended to help restore macroeconomic stability in the aid-dependent Southern African nation. However, only an initial disbursement of $35 million was made before the programme was discontinued.
In a statement, the IMF said the programme had failed to meet its objectives, citing high inflation, persistent foreign exchange shortages, and challenges in fiscal management.
“Fiscal discipline has proven difficult to maintain in the current environment due to elevated spending pressures and insufficient revenue mobilisation efforts,” the Fund noted.
Annual inflation in Malawi currently exceeds 30%, while a lack of foreign currency has severely limited access to essential imports, including fuel and fertiliser. The IMF also highlighted difficulties in rebuilding international reserves and said Malawi’s external debt remains unsustainable due to incomplete restructuring.
In response, Malawi’s finance ministry said the government plans to negotiate a new deal with the IMF following national elections in September. It attributed the country’s economic challenges to a series of external shocks, including a cholera outbreak, severe cyclones, and last year’s El Niño-driven drought.
Despite the programme’s termination, authorities say they remain committed to stabilising the economy and will continue seeking international support to navigate the current crisis.
