The Government of Malawi’s 2025/26 Mid-Year Budget Review comes at a time when the economy is facing slow growth, high inflation, and persistent forex shortages. ECAMA has analysed the key changes to help the public understand their implications.
The review shows that revenues and grants have underperformed, while recurrent expenditure has risen—driven mainly by pensions, FISP, debt interest payments, wages, and election-related spending. Development spending has been reduced, and the fiscal deficit continues to widen, putting more pressure on public debt, now at 86% of GDP.
To boost revenue, the government has introduced several tax and non-tax measures, including adjustments to PAYE, a 1% VAT increase, bank and mobile money transfer levies, capital gains tax changes, and stricter enforcement of remittances from MDAs and SOEs. While these measures may raise revenue, they also risk increasing the cost of living and operating costs for businesses.
Overall, the mid-year review highlights the difficult trade-offs Malawi faces in balancing fiscal stability with economic recovery. ECAMA urges careful implementation of the proposed measures to minimise unintended negative impacts on households and businesses.
