Malawi is reeling from several shocks, including a drought last year which
contributed to elevated inflation, and is now faced with falling grant inflows as ODA pulls
back. Loose fiscal policy, from slippages as well as responses to shocks, together with loose
monetary policies and exchange rate inflexibility subsequent to the November 2023
depreciation, have hampered macro stabilization. Food insecurity remains entrenched,
macroeconomic instability has deepened, real growth is weak, and fiscal and debt dynamics
continue to erode. The scope for reform appears limited ahead of general elections, which
are scheduled for September 2025. The 2023 Extended Credit Facility (ECF) automatically
terminated on May 14, 2025, eighteen months after approval without completing a review.