On July 22, 2025, the IMF Executive Board concluded its 2025 Article IV Consultation with Malawi. The consultation — a regular review of a country’s economic policies and prospects — is the IMF’s primary ongoing engagement with Malawi following the termination of the ECF program in May 2025.

What the consultation found

The IMF’s assessment for 2025 projections:

  • Real GDP growth: 2.4–2.7% — an improvement on 2024’s 1.8%, but still below population growth
  • Inflation: projected at approximately 27% for 2025 — declining from 32.3% in 2024 but still elevated
  • Fiscal deficit: remains large, with debt sustainability a continuing concern
  • Forex situation: improving but fragile — the official rate has been stable, but the informal premium persists

The consultation noted the government’s stated commitment to fiscal consolidation and structural reform, while flagging the challenges of implementation given Malawi’s limited institutional capacity and political pressures.

The informal market premium

One of the most striking data points in the Article IV FAQ was the scale of the informal forex premium: the Kwacha traded at premiums of up to 150% above the official rate in March 2025. This figure — rarely stated this explicitly in official documents — captures the real forex constraint that businesses face when the official rate is not accessible.

The IMF’s view is that exchange rate flexibility (allowing the official rate to adjust toward the informal rate) is part of the solution, alongside measures to increase forex supply through exports and diaspora remittances.

The government’s position

The Malawian government, as reported in November 2025, has ruled out further formal devaluation as a policy tool, preferring a “cocktail” of measures to improve forex availability without the inflationary pass-through effects of another major devaluation. The IMF and government are aligned on many reform directions but have some differences on the pace and mechanism of exchange rate adjustment.

What the Article IV means for investors

The Article IV is not binding — it does not disburse money or impose conditions. Its value is as the IMF’s independent, data-driven assessment of Malawi’s economic situation. For companies doing investment due diligence, it is one of the most reliable starting points for macro analysis.

Key takeaways from the 2025 consultation:

  • The economy is stabilising after the 2022–2023 crisis years, but the stabilisation is incomplete
  • Inflation is declining but will remain high through 2026
  • The forex situation is the most significant ongoing constraint on business operations
  • The government reform agenda is credible in direction, but implementation capacity is a limiting factor

Our read

The IMF’s Article IV assessment is consistent with what we observe on the ground: a Malawi that is genuinely improving but requires realistic expectations and careful planning. The stabilisation that has occurred since the November 2023 devaluation is real. The structural challenges — forex scarcity, fiscal constraints, infrastructure gaps — are also real. Both can be true simultaneously.

Sources: IMF Executive Board press release July 22, 2025, IMF Malawi FAQ on Article IV consultation 2025.