Malawi Freedom Network 
By Staff Reporter
Lilongwe, Malawi — The Malawi Government recorded a K10.8 billion fiscal deficit in the first quarter of the 2026/27 financial year, despite a strong improvement in its financial position in June that helped offset substantial deficits recorded in April and May.
A fiscal deficit occurs when government expenditure exceeds the revenue it collects over a specified period.
According to the Reserve Bank of Malawi (RBM) June 2026 Monthly Economic Review, government recorded a deficit of K254.2 billion in April and K106.5 billion in May before turning the situation around with a K349.9 billion surplus in June.
The June surplus was largely supported by a significant increase in government revenue, coupled with a reduction in expenditure.
Government revenue rises sharply in June
Government revenue increased by 84 percent in June, rising from K480.5 billion in May to K884.4 billion.
Tax revenue accounted for a large share of the increase, rising from K122.9 billion in May to K503 billion in June.
Non-tax revenue also recorded a substantial increase, rising by K292.5 billion to K313.7 billion during the month.
The sharp improvement in revenue helped government move from a deficit in May to a sizeable surplus in June.
Government spending declines
At the same time, government reduced its expenditure in June.
Total government spending fell by 8.9 percent, from K587 billion in May to K534.5 billion in June.
Recurrent expenditure, which covers the day-to-day operations of government, declined by K40 billion to K458.1 billion.
Development expenditure also decreased by K12.5 billion to K76.5 billion.
The combination of higher revenue and lower expenditure resulted in the K349.9 billion fiscal surplus recorded in June.
First-quarter fiscal position
Despite the strong June performance, the large deficits recorded in April and May left government with an overall K10.8 billion fiscal deficit for the first quarter of the 2026/27 financial year.
The figures highlight the pressure facing government as it seeks to improve public finances and strengthen fiscal discipline during the financial year.
The government has set a fiscal consolidation target aimed at reducing the fiscal deficit from 11.9 percent of Gross Domestic Product (GDP) to 9 percent.
Fiscal consolidation involves measures aimed at improving government finances by increasing revenue, controlling expenditure or a combination of both.
Fiscal consolidation remains a key priority
The first-quarter figures come as Malawi continues efforts to strengthen fiscal management and reduce pressure on public finances.
The sharp turnaround in June demonstrates the impact that improved revenue collection and expenditure control can have on the government’s fiscal position. However, maintaining such improvements throughout the financial year will be important if government is to achieve its deficit-reduction target.
The 2026/27 financial year runs from April 1, 2026, to March 31, 2027.
The government’s ability to sustain revenue collection while controlling recurrent and development expenditure will therefore remain critical to the implementation of its fiscal consolidation programme.
Key figures at a glance
- First-quarter fiscal deficit: K10.8 billion
- April deficit: K254.2 billion
- May deficit: K106.5 billion
- June surplus: K349.9 billion
- June government revenue: K884.4 billion
- June government expenditure: K534.5 billion
- Fiscal deficit target: 9 percent of GDP
- Previous deficit level: 11.9 percent of GDP
- Financial year: April 1, 2026 – March 31, 2027
The June improvement provides a positive indication for government finances, but sustaining the gains over the remaining months of the 2026/27 financial year will be crucial to achieving Malawi’s fiscal consolidation objectives.
