Malawi is facing one of its most serious economic crises in many years, according to a new World Bank report released three days ago. The 128-page document paints a worrying picture of a country struggling under shrinking growth, rising prices and increasing debt, with millions slipping deeper into poverty. For ordinary Malawians already battling high prices and low incomes, the report reads like a hard truth: life is tough, and without urgent change, it may get even tougher.
The report says Malawi’s economy has been getting smaller while the cost of living keeps climbing. Prices have been rising at about 30 percent each year, making food, transport and basic goods too expensive for many households. As a result, more than 75 percent of Malawians now live in extreme poverty. That means three out of every four people cannot meet their daily basic needs.
A major problem is that the government continues to spend more money than it collects in taxes. For years, Malawi has run one of the highest budget deficits in Africa, far above the SADC rule that says countries should stay below a 3 percent deficit. Instead of cutting spending, the country has borrowed more and more, pushing Malawi into dangerous levels of debt.
The numbers are alarming. By 2024, Malawi’s public debt had grown to 90.9 percent of the country’s entire economic output. At the same time, the Reserve Bank lost huge amounts of money because of foreign exchange shortages. It lost MWK 708.7 billion in 2023 and MWK 200.4 billion in 2022. These losses show how fragile the economy has become.
Despite spending more, government services have not improved. The report shows that government spending has almost doubled over the last decade—from 16 percent of GDP in 2011/12 to 31 percent in 2024/25. But citizens do not see better services. Roads, schools and hospitals are often delayed or poorly managed. Only about 75 percent of development projects ever get completed. Money is being spent, but results are missing.
The government wage bill is another major pressure point. In the early 2000s, it was less than 3 percent of GDP. Today it is above 6 percent. Government workers earn almost 50 percent more than people doing similar jobs in the private sector. This makes the wage bill too heavy for the economy to carry.
State-owned companies are also struggling. In 2023 they made a profit of MWK 543 billion, but in 2024 they swung into a loss of MWK 47.63 billion. ESCOM and Blantyre Water Board are among the worst performers, facing growing debts and unpaid bills. Their poor performance affects citizens through electricity blackouts and water shortages.
Fuel subsidies, which are supposed to help the poor, mostly benefit the richest 20 percent. And because fuel prices were not adjusted on time between 2023 and 2025, large debts built up for fuel suppliers.
Mining could bring some money—between US$200 million and US$500 million a year by the early 2030s—but it will not solve everything.
The report ends with a clear message: Malawi must reform now or face an even deeper crisis. Without action, public debt could rise to 143 percent of GDP by 2035, creating even harsher conditions for millions already struggling to survive.
