ICAM dismisses hyperinflation claims, affirms Malawi’s economy remains stable

The Institute of Chartered Accountants in Malawi (ICAM) has reaffirmed that Malawi’s economy is not hyperinflationary.

This follows reports from PwC, the International Monetary Fund’s (IMF) World Economic Outlook, and the International Practices Task Force (IPTF), suggesting that Malawi could be classified as hyperinflationary by December 31, 2024.

In an official report signed by ICAM President Daniel Jere, the institute confirmed that “Malawi does not meet the criteria for hyperinflationary status,” referencing IAS 29 – Financial Reporting in Hyperinflationary Economies.

The report, titled Update on the Application of IAS 29 Financial Reporting in Hyperinflationary Economies, explains that while cumulative inflation has exceeded 100% over the past three years, reaching 116%, other essential indicators do not support a hyperinflationary classification.

“Our analysis shows that, while inflation has been high, the economy lacks critical hyperinflationary traits,” the report stated.

“In Malawi, key qualitative factors—such as a widespread shift to foreign currency for everyday transactions and CPI-linked pricing—are absent, indicating that the local currency remains the primary unit of trade and investment.”

ICAM also highlighted that in hyperinflationary environments, goods and services are typically priced in a stable foreign currency, reflecting a reduced value in the local currency.

ICAM says this contrasts with Malawi’s situation, where pricing is primarily in the local currency.

Only specific sectors, like real estate and international transactions, use foreign currencies, suggesting continued reliance on the kwacha for daily transactions.

As a result, ICAM advises against applying IAS 29 to 2024 financial statements, offering Malawian entities clarity on reporting requirements amid evolving economic conditions.

Meanwhile, Malawi’s inflation projections indicate that the economy is expected to stabilize soon, as both the Reserve Bank of Malawi (RBM) and the IMF forecast declining inflation rates for 2025.