The Institute of Chartered Accountants in Malawi (ICAM) has said that as at 31 March 2025, cumulative inflation in Malawi over a three-year cycle reached 118.4 percent (112.7percent per previous assessment as at 30th November 2024), surpassing the 100 percent IAS 29 threshold.
According to a statement signed by ICAM president Daniel Jere, despite the high inflation, the other qualitative indicators of hyperinflation were not evident as at that date.
“Most prices remain quoted in Malawi Kwacha, and the population continued to value it as legal tender for transactions in the country. There was no evidence of widespread immediate investment of local currency to preserve purchasing power or of prices and wages being indexed to inflation.
“The prolonged shortage of foreign currency led to a reliance on the parallel market, which contributed to inflationary pressures. Food inflation remained relatively higher than anticipated due to maize shortages in some parts of the country. This notwithstanding, sales and credit transactions were still largely based on historical costs, interest rates remained stable (with policy rate remaining at 26% pa) and wage adjustments were not aligned with CPI changes.
“Despite exceeding the quantitative inflation threshold, the overall assessment remains that Malawi does not meet the full criteria of a hyperinflationary economy under IAS 29. Therefore, hyperinflationary financial reporting directive issued on 27 December 2024 remains in force. The Institute of Chartered Accountants in Malawi will continue to monitor the situation and will issue a comprehensive guidance as at 30 June 2025,” reads the statement in part
Malawi adopted IFRS in 2001, and IAS 29 governs financial reporting in hyperinflationary economies. Determining whether a country meets the LAS 29 threshold requires evaluating qualitative and quantitative factors, including cumulative inflation and behaviours in the economy.
