Malawi’s money supply climbed to a record K3.78 trillion (US$2.16 billion) in June 2025, reflecting continued growth in liquidity driven by higher government borrowing, rising private sector credit, and increased currency in circulation, according to data from the Reserve Bank of Malawi (RBM).
The expansion marks the highest level of broad money on record and underscores mounting pressure on monetary authorities as they seek to rein in inflation while supporting economic activity in a challenging macroeconomic environment.
RBM data show that growth in money supply was largely supported by an increase in net domestic assets, particularly credit to government, as the state continued to rely on local borrowing to finance budget deficits amid constrained external funding. Commercial bank lending to the private sector also rose, though at a slower pace, reflecting cautious risk appetite in the banking system.
Currency outside banks remained elevated, signalling persistent cash usage by households and businesses, a trend economists attribute to high inflation, rising transaction costs, and limited access to digital financial services in parts of the country.
Economists warn that sustained expansion in money supply could complicate efforts to tame inflation, which has remained stubbornly high due to food shortages, currency depreciation, and elevated import costs. Malawi has faced recurring price pressures following climate-related shocks that hit agricultural output, alongside foreign exchange shortages that have weakened the kwacha.
“The growth in money supply reflects fiscal pressures and structural challenges in the economy,” said an economist in Blantyre. “Without stronger fiscal consolidation and improved productivity, excess liquidity could continue to feed inflationary pressures.”
The RBM has tightened monetary policy in recent months, raising the policy rate and maintaining tight liquidity conditions to curb price growth and stabilise the currency. However, analysts say the effectiveness of monetary tightening is being tested by heavy government borrowing from the domestic market.
Authorities have said they remain committed to price stability and financial sector soundness, while pursuing reforms aimed at boosting exports, improving agricultural resilience, and restoring confidence among development partners.
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As Malawi navigates a delicate balance between supporting growth and controlling inflation, the record-high money supply highlights the scale of the policy challenge facing the central bank and fiscal authorities in the months ahead.
