By The Forum

The Malawi Government says its newly introduced austerity measures will help save about MWK44 billion as the administration intensifies fiscal discipline in the second half of the 2025/2026 national budget.

Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha made the announcement on Monday while wrapping up debate on the 2025/2026 Mid-Year Budget, which was presented on Friday, 21 November 2025.

He said although the austerity steps may take time to show full impact, savings will begin to materialise within a few months.

“I would like to assure the August House that the Government is fully committed to implementing the announced austerity measures. It is expected that within a few months of the 2025/2026 financial year, MWK44 billion or more will be saved from travel restrictions, a freeze on motor vehicle procurement, and staff reductions in embassies,” said Mwanamvekha.

Parliament has since passed the MWK8.589 trillion budget after lawmakers scrutinised and approved every vote during the Committee of Supply stage, appropriating the revised budget to the Consolidated Recurrent and Development Accounts.

Also Read: Malawi budget revision pushes expenditure to K8.589 trillion as deficit widens

The budget was revised from MWK8.077 trillion to address expenditure pressures experienced in the first half of the fiscal year.

Mwanamvekha said the additional MWK512.6 billion is intended to support institutions that had depleted their allocations by mid-year, including the Office of the President and Cabinet, State Residences, and the Office of the Vice President.

He said the added resources will also assist with clearing outstanding gratuities for retirees, supporting the Farm Input Subsidy Program (FISP), servicing public debt interest, paying wages and salaries, and covering expenses for upcoming by-elections.

Responding to the Budget and Finance Committee’s concern over a MWK20 billion increase in generic goods and services despite austerity measures, Mwanamvekha said the rise was driven by the need to fund institutions that had exhausted their budgets by 30 September 2025.

Addressing Malawi Congress Party (MCP) concerns over budget shortfalls, the minister said the party must acknowledge its role in creating the economic challenges Malawi now faces.

He said the freeze on promotions and recruitment remains necessary, describing it as a temporary measure designed to prevent unplanned and irresponsible hiring.

“From April to September 2025, the Malawi Congress Party recruited 33,000 officers and promoted 31,933 without corresponding budget resources. Many officers were also recruited on contract regardless of grade. This is clear evidence of irresponsible public finance management,” he said.

On tax measures — including adjustments to Pay As You Earn (PAYE), lowering the supernormal profits threshold from MWK10 billion to MWK5 billion, and introducing capital gains tax on shares held for more than a year — Mwanamvekha said the measures favour low-income earners while helping government generate essential revenue without undermining private sector growth.

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