Malawi’s Debt Crisis Hits Women and Children the Hardest

Malawi is grappling with a deepening debt crisis that is severely constraining its ability to provide essential services, with women and children disproportionately affected. Malawi’s public debt has been rising sharply amid fiscal deficits, inflationary pressures, and external shocks like Cyclone Freddy and droughts. The government’s heavy debt servicing obligations crowd out critical spending on health, education, and social protection – sectors that are vital for improving the well-being of women and children. Despite progress in reducing child mortality and fertility rates, malnutrition remains alarmingly high, with 38 per cent of children under five chronically stunted in 2015. Successive poor harvests and foreign exchange shortages have led to food deficits, disproportionately impacting women-headed households and children’s nutrition. This piece seeks to provide a grassroots perspective on the issue and propose remedies to shield women and children from the negative impacts of the debt crisis.

Debt Repayment Eats Away the National Budget, Which Was Also Intended for SDGs

Joint World Bank/IMF Debt Sustainability Analysis has consistently classified Malawi as in distress. The Ministry of Finance reported $714 billion (86.4 per cent of GDP) total debt in the 2025/26 national budget. Of this, 54 per cent (US$388 billion) is domestic debt, and 46 per cent (US$326 billion) is external debt. “This debt probably dates back to the 1970s, when concessional borrowing offered longer grace periods, small payments, and small interest,” revealed the Reserve Bank governor, Dr Mafuta Mwale, in an online interface with Malawians in the diaspora on 16 August 2025. Stabilisation attempts, such as the IMF Extended Credit Facility (ECF), which Malawi secured in November 2023, faced several implementation challenges and ultimately failed to stabilise the economy, leading to its termination in May 2025. Nevertheless, as a condition for the granting of the ECF, Malawi experienced two major devaluations of its currency: 25 per cent in May 2022 and 44 per cent in November 2023, which caused sharp price hikes and failed to stabilise the foreign exchange market. 

We are the ones who shoulder all the burdens, including caring for children and the sick, especially when our businesses struggle or collapse.

As debt repayments consume nearly a quarter of the national budget, the Malawi Economic Justice Network has warned that Malawi’s progress in achieving the United Nations Sustainable Development Goals is threatened as debt servicing reduces budget allocations to social sectors. Crowding out of social spending greatly affects women, children, and youth, who constitute two thirds of the population. “Considering the state of the economy now, women suffer the most. We are the ones who shoulder all the burdens, including caring for children and the sick, especially when our businesses struggle or collapse,” said the chairperson of the Young Urban Women Network in Mchinji District while raising concerns about the impact of government debt and taxation on women’s livelihoods. However, authorities argue that debt servicing must be prioritised to avoid default, which could paralyse the country. 

Cuts Mainly Affect the Education Sector

Nowhere is crowding out more visible than in the education sector, where the budget has decreased from 22 per cent in 2019/20 to 16.6 per cent in 2025/26, leading to teacher shortages, poor learning outcomes, and high unemployment. At Galeta Primary School in Mchinji District, where four teachers serve eight classes and students walk long distances, arriving at the school hungry, it is not surprising that no student passed the 2025 Primary School Leaving Certificate Examinations. Galeta, the group village head woman, attributed the poor results to the lack of basic educational resources, sentiments that were echoed by a teacher at the school who said that inadequate materials and absenteeism are major challenges.

Poor education outcomes are mirrored in the lack of competent personnel within the healthcare system.

Poor education outcomes are mirrored in the lack of competent personnel within the healthcare system. A confidential inquiry into maternal death in Malawi found that a shortage of health workers and resources is among the leading causes of maternal deaths in Malawi. Debt servicing has strained the healthcare budget, leading to a drop from 12.2 per cent to 9.2 per cent in 2025/26, short of the Abuja Declaration on Health. “The reduction comes at a time when demand for healthcare services continues to rise, making the shortfall even more alarming,” Health rights activist Maziko Matemba lamented. The withdrawal of US$185 million in USAID funding, which supported programmes like maternal health and vaccination campaigns, worsens the situation. Partners in Health (PIH), an NGO providing healthcare services in the rural district of Neno, emphasises that debt repayments undermine the right to health. Water, sanitation, and education are essential services children rely on to exercise their fundamental rights. When government funding is insufficient to meet these needs, children’s rights are violated. 

Debts Also Undermine the Right to Health in the Country

Research shows that poverty remains a major barrier to accessing essential maternal health services in countries like Malawi. Currently, 72 per cent of Malawi’s population lives below the poverty line. The World Bank projects that an additional 417,000 Malawians will fall below the US$2.15 per day poverty line in 2025, bringing the total to 15.8 million people living in poverty. This leaves Malawi trapped in an essential spending dilemma where 85 per cent of the budget is committed to essential expenditures that cannot be delayed; hence, borrowing continues despite unsustainable debt levels. 

With debt undermining the right to health, calls for restructuring Malawi’s debt are widespread, supported by NGOs like Partners In Health (PIH®) that warn that Malawi will remain economically unstable unless its external debts are restructured. Secondly, in cases where, due to wage bill constraints, austerity measures that are implemented as part of IMF conditions affect service delivery such as limiting the recruitment of healthcare and education professionals, such measures should be carefully considered, taking the social and welfare concerns of vulnerable groups into account. 

What Opportunities Does the G20 Presidency Offer?

Malawi’s situation is just part of the broader debt crisis in Africa. The debt burden has repeatedly weakened public services, as seen in Zimbabwe and Mozambique. This is why the Tony Blair Institute for Global Change advocates for combining domestic reforms with international collaboration. A recent UNCTAD report has highlighted systematic inequalities in the international financial system. Debt burdens differ significantly across countries depending on the terms of financing and the creditors accessed. For example, since 2020, developing regions have been borrowing at rates two to four times higher than the United States. South Africa’s G20 presidency is an opportunity to push for fairer debt restructuring mechanisms for Global South countries. Ultimately, sustainable debt management can only be achieved through inclusive citizen participation, accountability, and transparency in public debt management. 

The views and analyses expressed in this publication are those of the author and do not necessarily reflect the views of the Heinrich Böll Foundation.