The proceeds of the sale will be used to provide basic services for the country's poor, according to President Joyce Banda.
This move by Banda is the latest in a series of austerity measures she initiated to improve relations with western donors, including cutting her own salary by 30%.
The country saw its first protests under Banda in January when thousands of Malawians reportedly took to the streets peacefully in all three major cities for the first large-scale demonstration, against what they described as "the IMF's wrong economic prescriptions".
Her predecessor, the late Bingu wa Mutharika, was strongly criticised for buying the jet, and reportedly said it would be "cheap to run".
Since taking over, Mrs Banda has refused to travel in the jet.