Mutharika Returns to Power in Malawi as 23.8% Inflation Crisis Tests His Comeback

Economy · Malawi

Malawi’s voters did not just elect a president in September 2025. They reached back to a familiar name, Peter Mutharika, to break a cycle of shortages, high prices and donor estrangement that made daily life harder for one of the world’s poorest countries. His return places an 85-year-old former leader at the centre of a test that is as much about restoring trust with the IMF as it is about clearing fuel queues.

A Landslide Vote Against Economic Pain

Malawi’s general election on 16 September 2025 produced a decisive rejection of incumbent Lazarus Chakwera. Former president Peter Mutharika of the Democratic Progressive Party (DPP) won 56.8% of the valid presidential vote.

Chakwera of the Malawi Congress Party (MCP) received about 33%, a gap of more than 1.27 million votes. Turnout was reported at 76.4% of 7,203,390 registered voters.

Chakwera conceded on 24 September 2025, describing Mutharika’s lead as insurmountable. The Malawi Electoral Commission (MEC) declared Mutharika president-elect the same day.

At 85 years old, Mutharika becomes the seventh president of Malawi. He previously served as the country’s fifth president from 2014 to 2020, before losing to Chakwera in the court-ordered 2020 rerun.

The Inheritance: Inflation Still Far Above Target

Mutharika inherits an inflation rate that has fallen but remains punishing. Annual headline inflation was 23.8% in March 2026, down from 24.1% in February and 24.9% in January.

The March 2026 figure is the lowest since July 2022. Yet it is still radically above the Reserve Bank of Malawi’s medium-term target band of 5% plus or minus 2%.

In 2024, annual average inflation was 32.2%. In 2025, it moderated to 28.4%, driven by decreases in both food and non-food inflation, though the level remained exceptionally high.

The first quarter of 2026 averaged 24.2% inflation, against a 2025 full-year average of 28.4%. Analysts caution that the descent is slow and fragile.

Forex Shortages and Fuel Queues as Daily Politics

The Guardian’s election coverage framed Chakwera’s term around soaring inflation, shortages of essential supplies, climate-related disasters and reductions in international aid. This combination defined the lived experience of the vote.

Reuters noted that voters rejected Chakwera after five years of worsening economic crisis in one of the world’s poorest countries. The specific numeric level of foreign exchange reserves is not published in current verified sources, but the qualitative evidence of import compression is unambiguous.

Deficit monetisation remains a central structural problem. The Economist Intelligence Unit links high inflation in 2026 to continued deficit monetisation, which typically coexists with foreign exchange imbalances and fuel import bottlenecks.

For ordinary Malawians, the queues and shortages are not an abstraction. They are the reason an 85-year-old former president could campaign as the candidate of restoration rather than novelty.

The IMF and Donor Re-engagement Question

Mutharika’s room for manoeuvre is constrained by the absence of a new International Monetary Fund programme. The EIU’s 2026 forecast explicitly assumes little prospect of a new IMF programme in the medium term.

This is not a technical detail. Without an IMF programme, Malawi loses a key anchor for budget support and balance-of-payments credibility with other donors.

The Guardian’s reporting cited reductions in international aid as part of the downturn under Chakwera. That makes donor re-engagement a central political and economic test for the DPP government.

Bridgepath Capital published its Malawi Annual Economic Report 2025 on 29 January 2026. The wide range reflects uncertainty about policy direction and external support.

Food Insecurity After Drought

Climate-related disasters were named by The Guardian as a core driver of the economic crisis that cost Chakwera the presidency. Drought has hit food production and pushed up food inflation.

Food inflation remains a major component of Malawi’s overall price pressure. The 2025 decline in headline inflation came from decreases in both food and non-food inflation, but food prices remain structurally high.

For a country where a large share of household income goes to food, the link between drought, harvest failure and political survival is direct. Mutharika’s DPP campaigned on the visible failure of the incumbent to protect basic food access.

The new government faces the task of importing food and stabilising prices while foreign exchange is scarce. This is the circular trap that defines Malawi’s crisis: drought cuts exports, reduces forex, and makes food imports harder to finance.

Deficit Monetisation and the Central Bank

The Reserve Bank of Malawi’s inflation target band of 5% plus or minus 2% is a long way from the March 2026 reading of 23.8%. The gap reflects years of fiscal dominance over monetary policy.

Deficit monetisation occurs when the government finances its budget gap by borrowing from the central bank, effectively printing money. The EIU lists this as the main reason inflation will stay high in 2026.

The DPP government therefore faces an immediate credibility test: whether it can present a budget that reduces reliance on central bank financing. Without that, any fall in inflation will be temporary.

Investors in Malawi’s small fixed-income market will watch the next budget and the central bank’s stance. A return to IMF talks would signal a break from monetisation, but current analysis sees little prospect of such a programme soon.

The Investor View: Few Entry Points, High Hurdle

Malawi is not a major destination for foreign portfolio investors. Its financial markets are thin, its currency is restricted, and the inflation environment deters long-duration local-currency exposure.

The few investors active in Malawi tend to focus on agriculture, agro-processing, energy or donor-funded infrastructure. Their main risks are currency convertibility, fuel supply for operations, and political unpredictability.

The new government’s ability to clear fuel queues and stabilise the kwacha will matter more than headline election promises. Forex shortages delay imports, raise operating costs, and compress profit margins.

Mutharika’s previous term from 2014 to 2020 offers a partial guide. Investors remember both the infrastructure rhetoric and the later fiscal strain. The question now is whether his second term can avoid repeating the same cycle.

A Cycle of Crisis and Political Comeback

Malawi’s politics has repeatedly swung on economic failure. Chakwera won in 2020 after the courts annulled the 2019 result, but he lost in 2025 because voters judged his economic record harshly.

Mutharika’s return is not a new direction. It is a restoration of a political family that has dominated Malawi’s post-independence history, from his brother Bingu wa Mutharika to his own 2014-2020 presidency.

Chatham House described the result as a decisive victory and a lesson about incumbency costs when economic crisis deepens. The 56.8% to 33% margin leaves no ambiguity about the public mood.

Yet the structural constraints that defeated Chakwera have not disappeared. Drought, donor fatigue, thin forex buffers and weak export diversification will confront Mutharika from the first week in office.

What the First Six Months Will Reveal

The first test is inflation. The March 2026 print of 23.8% is an improvement, but the EIU forecast of 29% average inflation for 2026 suggests the improvement may not last without policy change.

The second test is fuel. Clearing queues requires foreign exchange to pay for imports, which in turn requires donor support or export earnings. Neither is immediately scalable in Malawi.

The third test is food. The new government must manage the aftermath of drought while avoiding social unrest. Food security is the oldest and most sensitive political issue in Malawi.

For the few foreign investors and donors still engaged, these first six months will determine whether the Mutharika comeback is a genuine break from crisis or merely the latest turn in a long cycle.