Africa-Press – Malawi. A new World Bank report has revealed that Malawi is facing one of the worst economic crises in its history, driven by rising debt, wasteful spending, and poor investment in people and development.
The report shows that government spending has almost doubled over the past decade and is now far higher than what the country earns. For every 100 kwacha produced in the economy, the government spends more than 30 kwacha, placing Malawi among the highest-spending countries in Africa. To cover this gap, the government has relied on printing money and borrowing at high interest rates, a move that has pushed up prices and worsened the cost of living.
According to the World Bank, Malawi’s debt situation has become unsustainable. More than half of all tax revenue collected by the government is now used to pay interest on loans. This has left very little money for essential services such as education, healthcare, roads, and social protection for the poor.
The report further reveals that many government policies benefit the rich more than the poor. Subsidies on fuel and electricity mainly help the wealthiest 20 percent of Malawians, while poor households continue to struggle with high prices, unreliable services, and limited support.
State-owned companies are also contributing heavily to the crisis. Institutions such as ESCOM and Blantyre Water Board are losing billions of kwacha every year because they charge prices that do not cover their costs. The government is forced to bail them out, diverting public funds away from critical social services.
The World Bank also highlights serious weaknesses in Malawi’s tax system. While ordinary citizens continue to pay taxes, large businesses and wealthy individuals benefit from numerous exemptions and loopholes. As a result, the country loses an estimated 1.4 percent of its national income every year in unnecessary tax breaks, and overall tax collection remains below government targets.
On mining, the report warns against unrealistic expectations. Although minerals such as uranium and rare earths offer potential, meaningful revenue is unlikely to materialize for at least five to ten years. Even then, mining income alone will not be enough to solve Malawi’s economic problems, and there are high risks of corruption and mismanagement if strong safeguards are not put in place.
The World Bank says Malawi now stands at a critical crossroads. If current policies continue, debt will rise further, economic growth will slow, and living standards will keep falling, leaving the country extremely vulnerable to future shocks. With gradual but firm reforms, the economy could stabilize and return to growth in the coming years. With bold and rapid reforms, recovery could come faster and free up resources for development.
The report concludes that Malawi has reached a breaking point. It warns that years of overspending, unfair subsidies, weak tax collection, and poorly managed state companies have trapped the country in a cycle of debt and poverty. The World Bank calls for immediate, transparent, and serious reforms to cut waste, protect the poor, fix state enterprises, and restore public trust.
The message is clear: without action now, the economic pain faced by ordinary Malawians will only grow worse.
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