Blantyre - The IMF said on Thursday Malawi has made progress after a massive government corruption scandal last year, but urged action to bring soaring prices under control.
Malawi adopted an action plan to bust graft in the wake of massive fraud last year that prompted Western donors to freeze $150m in aid.
The country is heavily dependent on donors, who bankroll up to 40% of its national budget.
"The authorities have made progress in addressing governance and public financial management weaknesses," said the International Monetary Fund at the end of its latest review mission to the country.
The IMF said the central bank should "tighten monetary policy more aggressively", noting that inflation remains high at nearly 25%.
President Joyce Banda, who faces an election in just over six weeks, has implemented austerity steps that led to the restoration of an IMF $79.4m credit facility.
The facility was suspended during the administration of her predecessor Bingu wa Mutharika, who died from a heart attack in April 2012.
The IMF will return in June for another review that will pave way for the disbursement of a $20m credit facility.