Malawi's $175-million loan programme from the International Monetary Fund (IMF) has been terminated after no review was completed over an 18-month period, the fund said late on Wednesday.

The donor-dependent Southern African country only received an initial disbursement of $35-million under the four-year Extended Credit Facility approved in November 2023.

The IMF said the programme was not able to restore macroeconomic stability.

Inflation is running at over 30% in annual terms, while crippling foreign exchange shortages have curbed key imports such as fuel and fertiliser.

"Fiscal discipline has proven difficult to maintain in the current environment due to elevated spending pressures and insufficient revenue mobilisation efforts," the IMF said on its website.

It said the country's foreign exchange system had made it difficult to rebuild international reserves and its external debt remained unsustainable because it had not been fully restructured.

Malawi's finance ministry said the government would seek to negotiate a new IMF programme after national elections in September.

It said government efforts to stabilise the economy had been dogged by "exogenous shocks" like a cholera outbreak, cyclones and last year's El Nino-induced drought.