On 14 December 2015 the IMF issued a report and selected issues paper following the conclusion of discussions in Malawi under Article IV of the IMF’s articles of agreement.
The economic outlook for Malawi remains difficult, reflecting weather-related economic shocks, high inflation and weaker global demand that could affect exports. Real GDP growth is project to decrease to 3% in 2015 owing to the effect of floods followed by a drought causing a 30% decline in the maize harvest. Growth is estimated to rise to around 5.5% in the medium term.
The IMF indicates that greater revenue mobilization is required to meet sustainable development goals and improve public services. The revenue to GDP ratio in Malawi is higher than in some neighboring countries but the aim should be to increase domestic revenues by 1% to 1.5% of GDP in the medium term. This would require strengthening value added tax (VAT) compliance, performing more frequent tax audits of large taxpayers and broadening the tax base in respect of telecoms, mining and property taxes. The tax administration should be modernized by more computerization.
