The International Monetary Fund has terminated Malawi’s $175 million loan programme after no reviews were completed over the past 18 months, the IMF said in a statement late Wednesday.
The four-year Extended Credit Facility (ECF), approved in November 2023, had disbursed just $35 million before being halted. The IMF said the programme failed to restore macroeconomic stability in the donor-dependent Southern African nation.
Malawi is grappling with annual inflation above 30% and persistent foreign currency shortages that have limited access to essential imports like fuel and fertiliser.
“Fiscal discipline has proven difficult to maintain in the current environment due to elevated spending pressures and insufficient revenue mobilisation efforts,” the IMF noted.
The Fund added that Malawi’s exchange rate system hindered efforts to rebuild foreign reserves and that the country’s external debt remained unsustainable in the absence of a comprehensive restructuring.
Malawi’s finance ministry said it hopes to negotiate a new agreement with the IMF after national elections scheduled for September. It blamed a series of external shocks — including a cholera outbreak, multiple cyclones, and last year’s El Nino-induced drought — for derailing economic recovery efforts.