Government has unveiled its 2025/2026 Budget Policy Statement, laying out a comprehensive strategy to address the country’s ongoing economic challenges. Delivered in the august House by the Minister of Finance, the statement has highlighted the government’s commitment to navigating the economic turbulence which has persisted over a protracted period, marked by inflation, stagnant economic growth, and foreign exchange imbalances.
Madam Speaker, the Minister began, “The economic landscape has not evolved as anticipated, with persistent pressures on key indicators such as economic growth, exchange rates, inflation, and structural shifts in trade and production.” The government is prioritizing monetary policies and fiscal measures to contain inflation, maintaining a policy rate of 26.0 percent as of January 2025.
A primary focus of the budget is the need to stabilize foreign exchange reserves. The Minister disclosed that while improvements have been noted in reserves recently particularly from December 2024 to January 2025, substantial challenges remain. The Finance Minister disclosed that measures are being taken to boost productivity, enhance foreign exchange generation, and curtail malpractices in the foreign exchange market.
According to the statement, as of September 2024, the country’s public debt stood at K16.19 trillion, constituting 86.4 percent of GDP. The Minister submitted that the government is actively negotiating with creditors to restructure this debt and has committed to only contracting concessional loans to finance key projects.
In a bid to revitalize the economy, the government is implementing structural reforms targeting key sectors, including agriculture, tourism, mining, and manufacturing.
The Minister remarked that “this budget is guided by the theme: Consolidating Gains, Strengthening Resilience and Inclusivity for Accelerated Socio-Economic Transformation.”
Furthermore, the budget aims to improve revenue mobilization, with total revenue estimated at K4.35 trillion, while the total expenditure for the 2024/25 fiscal year is projected at K6.14 trillion, resulting in a deficit of K1.79 trillion.
The budget further showcases significant investments been planned for agriculture, infrastructure, and tourism, aiming to foster sustainable economic growth. The Minister pointed out various projects, including the Shire Valley Transformation Irrigation Project and advancements in healthcare, that underscore government priorities.
In addressing corruption and mismanagement, the government will continue implementing public financial management reforms, including a new electronic procurement system intended to enhance transparency and efficiency.
The Minister concluded the address by emphasizing the importance of national unity and collaboration to protect the economy from unpatriotic elements. The budget reflects a commitment to recovery and growth, with a clear directive for strategic investments designed to strengthen key sectors and enhance the overall resilience of the Malawian economy.
