Banda, criticised at home for devaluing the kwacha currency under pressure from the International Monetary Fund (IMF), told a joint press conference late Friday that "there will be no backtracking on the reforms".
"This is why I have been able to take difficult decisions that could have destroyed my political career because I know if we did not take this route the country could not be on the recovery path," said Banda.
Visiting IMF managing director Christine Lagarde urged the country to "stick to reforms for continued cooperation with the IMF".
"People of Malawi will soon begin to feel the benefits of the decisions that were made and that they were good," she said, adding that the IMF will focus to double growth in 2013.
The IMF, one of the main backers of the country's reforms, gave Malawi a three-year $157-million loan package in June to help fix the economy after ties had broken down amid a spree of global aid suspensions.
"It is with great expectation and optimism that the IMF will continue working with Malawi through programmes and expertise," said Lagarde.
Malawi under Mutharika
In 2011, the global lender suspended a $79.4-million credit facility meant to cushion chronic foreign exchange shortages during the administration of the late president Bingu wa Mutharika, who died in April last year.
Banda, who had been vice president, launched a raft of measures including an economic recovery plan to lure back donors who provide up to 40% of the country's development budget and salaries for its nearly 170 000 civil servants.
Under Mutharika, relations between Malawi and the agency had become tense after he constantly refused to devalue the currency as the IMF had advised, arguing it would trigger inflation and hurt the poor. In the country, 39% of the 13-million people live on less than a dollar a day.
Several key donors, including former colonial power Britain, suspended aid to the country, citing concerns about growing authoritarian tendencies in Mutharika's government. – Sapa-AFP