The World Bank has urged Malawi to undertake firm fiscal consolidation measures, warning that the country’s fragile public finances will continue to deteriorate without decisive action.

The call was made by World Bank Malawi Country Manager Firas Raad during the launch of the Malawi Public Finance Review report in Lilongwe.

According to the report, Malawi’s economic progress is being held back by a series of deep-seated structural weaknesses. It identifies eight major challenges, with exchange rate distortions and implicit subsidies among the most damaging. These distortions, the Bank says, are draining already limited public resources and preventing the economy from adjusting to external pressures.

The review also highlights a rapid rise in wage and interest payments, which has placed mounting pressure on government spending. Coupled with weakening fiscal governance, these trends are tightening fiscal space at a time when Malawi needs investment in essential services and growth-driven sectors.

Raad stressed that restoring macroeconomic stability will require disciplined reforms on both revenue generation and expenditure management. He noted that transparent budgeting, improved public sector efficiency, and curbing unproductive spending will be critical if Malawi is to create room for development financing and weather persistent economic shocks.

–ChannelAfrica–