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<p>Malawi has one of the highest rates of inflation in Africa: double digit inflation
is commonplace. High inflation, alongside high fiscal deficits, debt and interest
rates, are lowering business confidence and crowding out private investment. Social
services are being delivered from a constrained budget with high levels of government
borrowing. Poor harvests in 2015 and poor rainfall due to the ongoing El Nino are
affecting the national economy and Malawi is now facing its worst food insecurity
crisis in a decade. The UK and international partners are responding.</p><p>DFID Malawi
works closely with other development partners, in particular the World Bank and the
International Monetary Fund (IMF), to monitor the macroeconomic situation in Malawi.
The IMF’s Article IV Consultation in December 2015 concluded that <em>“an appropriately
tight fiscal policy is needed to support monetary policy actions aimed at placing
inflation on a downward trajectory.”</em> DFID is working with the World Bank to inform
the Government of Malawi’s next Development Strategy.</p>
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