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Funding reductions from the USAID agency in Washington this year, along with cuts from the UK and other contributors, have contributed to a wave of crises in Malawi that exacerbates economic instability as the general elections in September approach.
“Since 2013, the country has lost an estimated five per cent of its GDP, or roughly $545 million annually, due to reduced donor assistance,” Agnes Nyirongo, economic governance officer for the Centre for Social Concern, a non-government organisation, told AFP.
Declining oil prices further strain this situation.
According to the International Monetary Fund’s (IMF) list from February 2025, Malawi is one of six countries facing unsustainable debt levels. Public sector debt increased from 48 to 93 per cent of GDP between March 2020 and March 2024, according to government statistics referenced in a recent IMF report.
Structural weaknesses and fiscal mismanagement have contributed to Malawi’s economic challenges, noted university lecturer Bertha Chikadza, who is also the president of the Economics Association of Malawi.
For instance, tobacco accounts for 60 per cent of exports, and declines in its prices have led to reductions in foreign exchange earnings. Servicing the debt takes up around half of the domestic revenue, leaving minimal funds available for essential sectors such as health and education, according to Chikadza.
With inflation hitting 28.5 per cent this year and driving up costs, people in Malawi have taken to the streets to protest in various cities. The government’s strategies to cope, which include reducing public expenditure and increasing taxes, have been very unpopular.
In the context of seeking re-election in September, President Lazarus Chakwera reiterated at the UN General Assembly last year his appeals for debt relief, which would provide his country—and other African nations facing similar challenges—some much-needed “breathing space.”
The issue of debt relief is a key focus this year for the G20 group of leading economies, under the presidency of South Africa, which is the first African country to assume this leadership role.
