IMF growth prospects attract mixed reactions
The International Monetary Fund (IMF) has expressed optimism on Malawi’s growth rate of over six percent in the medium-term, which it says is a recipe for unlocking the economy’s potential, despite existing downside risks.
In a published statement yesterday, IMF said the growth prospects are underpinned on enhanced infrastructure investment and social services as well as an improved business environment, which will boost confidence and unlock the economy’s potential for higher, more broad-based and resilient growth and employment.
Political pressures in the run-up to next year’s elections that could weaken policy discipline and reform efforts, weather-induced shocks and declines in agricultural commodity prices, have since been singled out as the country’s main downside risks to growth.
In the statement, IMF deputy managing director and acting chairperson Tao Zhang, however, noted that the country’s fiscal position has deteriorated and the public debt to gross domestic product (GDP) ratio has risen despite progress made in achieving macroeconomic stabilisation following two years of drought, with a rebound in growth and inflation rate reduced to single digit.
“The medium-term economic outlook is favourable, with private sector activity expected to benefit from better infrastructure and an improved business climate. Progress will depend on the authorities’ strong ownership to support successful implementation of their programme,” he said.
Chancellor College economics professor Ben Kaluwa yesterday said in recent years, Malawi has made a lot of gains in the transport sector as well as on improving the business environment, despite registering marginal improvements in the social services.
He said: “Malawi has made tremendous improvements in the infrastructure sector, especially transportation where we have seen among other things, rehabilitation of railway lines which has eased the cost of doing business although Malawi is yet to take a strategic stance on how it is going to fully benefit from the same.
“We have also seen some marginal improvements in the social services although they are not heartwarming, but at least they offer a ray of hope. So, if this progress is maintained, we should be able to attain a six percent growth in the medium-term.”
Indigenous Businesses Association of Malawi (Ibam) president Mike Mlombwa said local businesses are yet to register gains that could trickle down as they are still being faced with numerous challenges, including electricity outages, which has left many businesses in a confused state.
“The business environment is not yet to where we feel it could be for businesses to start registering economic gains.
“The electricity outages have left many businesses confused and failing to plan. Government is also yet to implement reforms favourable to the growth of local businesses such as the Procurement Act, which was revised and promised us 60 percent of businesses, but we are still seeing foreign businesses claiming a 95 percent share,” he said.
IMF executive board has since approved a new three-year arrangement for Malawi under the Extended Credit Facility (ECF) for about $112.3 million (K82 billion), to support the country’s economic and financial reforms. n
