[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-109489-en":3,"doc-seo-109489-105":31,"detail-sidebar-cat-0-en-105":93},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":28,"seo_description":14,"update_tm":29,"read_time":30},109489,8796095462418,"Noah","https://ap-avatar.wpscdn.com/avatar/80000253c1241d02b47?x-image-process=image/resize,m_fixed,w_180,h_180&k=1778826106357471780",8,"Research & Report","Malawi Public Finance Review - Restoring Stability, Rebuilding Trust","Malawi’s public finances are assessed through eight key findings highlighting severe fiscal and external imbalances intensified by shocks since 2019. The review details how debt monetization, costly borrowing, and reserve bank foreign-exchange operations interact with inflation and exchange-rate constraints. It documents rising and rigid spending—especially recurrent costs—while development financing declines and depends heavily on external funds. It also examines tax constraints, fiscal risks from stressed state-owned enterprises, limited but useful mining revenue potential, and the urgency of restoring fiscal sustainability and policy credibility to rebuild trust.","Pub lic Disclosure Authorized Pub lic Disclosure Authorized Pub lic Disclosure Authorized Pub lic Disclosure Authorized  \nRESTORING  \nSTABILITY,  \nREBUILDING  \nTRUST  \nMalawi  \nPublic Finance Review  \nRESTORING  \nSTABILITY,  \nREBUILDING  \nTRUST  \nMalawi  \nPublic Finance Review  \n© 2025 International Bank for Reconstruction and Development / The World Bank  \n1818 H Street NW Washington DC 20433 Telephone: 202-473-1000  \n[Internet: www.worldbank.org](Internet: www.worldbank.org)  \nThis work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent.  \nThe World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.  \nRights and Permissions  \nThe material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work maybe reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given.  \nAny queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; [e-mail: pubrights@worldbank.org](e-mail: pubrights@worldbank.org).  \nCover image:  \n\"Firewood Sellers\"by Gilbert Mpakule  \nCover and interior design:  \nPiotr Ruczynski, London, United Kingdom; [prucz.co.uk](prucz.co.uk)  \n[Typesetting:](Typesetting:)  \nWojciech Wolocznik, Cambridge, United Kingdom Piotr Ruczynski, London, United Kingdom  \nEIGHT KEY FINDINGS  \nFROM THE PUBLIC FINANCE REVIEW  \n1 Mounting fiscal and external imbalances, compounded by a series of shocks since 2019, have pushed Malawi’s economy into its most severe crisis in recent history, and deepened the country’s decades-long economic stagnation. The fiscal deficit is among the highest in Sub-Saharan Africa, financed through debt monetization and costly borrowing, creating a vicious cycle: rising debt service costs and other rigid expenditurestake up an increasing share of fiscal space, crowding out growth-enhancing investment. Deficit financing by the Reserve Bank of Malawi (RBM) fuels inflation and exacerbates the impacts of a foreign exchange policy that constrains export growth and reduces Malawi's resilience to shocks.  \n2  \nForeign exchange distortions and the growing scale and scope of qua  \nsi-fiscal activities (QFAs) are adding to fiscal pressures. The RBM’s  \nforeign exchange operations, together with implicit fuel subsidies, distort  \nthe economy and compound fiscal challenges. QFAs among non-finan  \ncial State-Owned Enterprises (SOEs)—especially in utilities sectors and  \nfuel—have also become a major source of fiscal liabilities.  \n3  \nGovernment spending and fiscal deficits have risen sharply and remain  \nfar above pre-COVID-19 levels. Total expenditure almost doubled—from  \n16 percent of GDP in FY2011/12 to over 30 percent in FY2024/25—driven  \nby rising recurrent costs including the interest bill, civil service wages  \nand pensions, and SOE transfers. Rigid expenditures now absorb 80 per  \ncent of domestic revenue, significantly reducing fiscal flexibility. The public  \nwage bill has grown from less than 3 percent of GDP in the early 2000s to  \nover 6 percent in 2024, largely due to the expansion of the public sector  \nworkforce.  \n4  \nDevelopment spending has declined, and external financing makes up  \n60 percent of total development expenditure. Key sectors such as edu  \ncation, health, social protection, and infrastructure remain underfunded,  \nconstraining progress in critical areas. Investment in human capi","cbCaijhlhc40lQAr","https://ap.wps.com/l/cbCaijhlhc40lQAr","pdf",8464896,6,1,128,"English","en",105,"# Eight Key Findings from the Public Finance Review\n## Mounting fiscal and external imbalances and the debt-expenditure cycle\n## Foreign exchange distortions and quasi-fiscal activities\n## Rising government spending, deficits, and rigid expenditure pressures\n## Declining development spending and reliance on external financing\n## Tax-to-GDP performance, exemptions, and policy predictability\n## Financial stress in SOEs and related fiscal liabilities\n## Limited mining revenue potential and key institutional requirements\n## Urgency of restoring public finances and the cost of inaction","[{\"question\":\"What are the main drivers of Malawi’s most severe crisis in recent history according to the review?\",\"answer\":\"Mounting fiscal and external imbalances, compounded by shocks since 2019, are central drivers. Debt monetization and costly borrowing create a cycle that raises debt service costs and crowds out growth-enhancing investment.\"},{\"question\":\"How do foreign exchange distortions and quasi-fiscal activities affect fiscal pressures?\",\"answer\":\"Reserve bank foreign exchange operations and implicit fuel subsidies distort the economy and worsen fiscal challenges. Quasi-fiscal activities among non-financial state-owned enterprises add further fiscal liabilities.\"},{\"question\":\"Why is rebuilding trust and restoring public finances considered urgent?\",\"answer\":\"Persistent fiscal and current account deficits, combined with depleted buffers, make Malawi increasingly vulnerable. The review emphasizes the rapidly rising cost of inaction and the need for policy credibility and sustainability measures.\"}]","Malawi Public Finance Review - Restoring Stability, Rebuilding Trust | PDF",1784480342,323,{"code":4,"msg":32,"data":33},"ok",{"site_id":25,"language":24,"slug":34,"title":13,"keywords":35,"description":14,"schema_data":36,"social_meta":88,"head_meta":90,"extra_data":92,"updated_unix":29},"malawi-public-finance-review-restoring-stability-rebuilding-trust","",{"@graph":37,"@context":87},[38,55,70],{"@type":39,"itemListElement":40},"BreadcrumbList",[41,45,49,52],{"item":42,"name":43,"@type":44,"position":21},"https://docshare.wps.com","Home","ListItem",{"item":46,"name":47,"@type":44,"position":48},"https://docshare.wps.com/document/","Document",2,{"item":50,"name":12,"@type":44,"position":51},"https://docshare.wps.com/document/research-report/",3,{"item":53,"name":13,"@type":44,"position":54},"https://docshare.wps.com/document/malawi-public-finance-review-restoring-stability-rebuilding-trust/109489/",4,{"url":53,"name":13,"@type":56,"author":57,"headline":13,"publisher":59,"fileFormat":62,"inLanguage":24,"description":14,"dateModified":63,"datePublished":64,"encodingFormat":62,"isAccessibleForFree":65,"interactionStatistic":66},"DigitalDocument",{"name":9,"@type":58},"Person",{"url":42,"name":60,"@type":61},"DocShare","Organization","application/pdf","2026-07-29","2026-07-19",true,{"@type":67,"interactionType":68,"userInteractionCount":20},"InteractionCounter",{"@type":69},"ViewAction",{"@type":71,"mainEntity":72},"FAQPage",[73,79,83],{"name":74,"@type":75,"acceptedAnswer":76},"What are the main drivers of Malawi’s most severe crisis in recent history according to the review?","Question",{"text":77,"@type":78},"Mounting fiscal and external imbalances, compounded by shocks since 2019, are central drivers. Debt monetization and costly borrowing create a cycle that raises debt service costs and crowds out growth-enhancing investment.","Answer",{"name":80,"@type":75,"acceptedAnswer":81},"How do foreign exchange distortions and quasi-fiscal activities affect fiscal pressures?",{"text":82,"@type":78},"Reserve bank foreign exchange operations and implicit fuel subsidies distort the economy and worsen fiscal challenges. Quasi-fiscal activities among non-financial state-owned enterprises add further fiscal liabilities.",{"name":84,"@type":75,"acceptedAnswer":85},"Why is rebuilding trust and restoring public finances considered urgent?",{"text":86,"@type":78},"Persistent fiscal and current account deficits, combined with depleted buffers, make Malawi increasingly vulnerable. The review emphasizes the rapidly rising cost of inaction and the need for policy credibility and sustainability measures.","https://schema.org",{"og:url":53,"og:type":89,"og:title":13,"og:site_name":60,"og:description":14},"article",{"robots":91,"canonical":53},"index,follow",{"doc_id":7,"site_id":25},{"code":4,"msg":5,"data":94},[95,99,103,107,112,116,121,124,129,132,136],{"id":21,"doc_module":4,"doc_module_name":47,"category_name":96,"show_sort_weight":97,"slug":98},"Story & Novel",90,"story-novel",{"id":48,"doc_module":4,"doc_module_name":47,"category_name":100,"show_sort_weight":101,"slug":102},"Literature",80,"literature",{"id":54,"doc_module":4,"doc_module_name":47,"category_name":104,"show_sort_weight":105,"slug":106},"Exam",70,"exam",{"id":108,"doc_module":4,"doc_module_name":47,"category_name":109,"show_sort_weight":110,"slug":111},5,"Comic",60,"comic",{"id":20,"doc_module":4,"doc_module_name":47,"category_name":113,"show_sort_weight":114,"slug":115},"Technology",50,"technology",{"id":117,"doc_module":4,"doc_module_name":47,"category_name":118,"show_sort_weight":119,"slug":120},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":47,"category_name":12,"show_sort_weight":122,"slug":123},30,"research-report",{"id":125,"doc_module":4,"doc_module_name":47,"category_name":126,"show_sort_weight":127,"slug":128},9,"Religion & Spirituality",20,"religion-spirituality",{"id":127,"doc_module":4,"doc_module_name":47,"category_name":130,"show_sort_weight":127,"slug":131},"World Cup","world-cup",{"id":133,"doc_module":4,"doc_module_name":47,"category_name":134,"show_sort_weight":133,"slug":135},10,"Lifestyle","lifestyle",{"id":137,"doc_module":4,"doc_module_name":47,"category_name":138,"show_sort_weight":108,"slug":139},19,"General","general"]