The African Development Bank (AfDB) says government needs to moderate its expansionary fiscal policy to support the Reserve Bank of Malawi’s tight monetary policy efforts.
In its country analysis for Malawi, the pan-African bank observed that greater coordination between fiscal and monetary policy is key to stabilising inflation and creating conditions for lowering the policy rate, thereby improving private sector access to credit.
Reads the analysis in part: “The government’s current efforts to boost agricultural productivity through mega farms and mechanisation initiatives are commendable.
“Achieving this will require sustained macroeconomic stability and streamlined regulatory processes.”
Malawi Confederation of Chambers of Commerce and Industry said in its quarterly review that the unchanged policy rate of 26 percent, sustained for 11 consecutive months, signals a tight monetary policy stance aimed at containing inflation rate, currently at 271.1 percent.
