Minister of Finance and Economic Affair Sosten Gwengwe has admitted that the current turbulent economic environment characterised by external and domestic shocks poses a threat to Malawi 2063 (MW2063), the country’s long-term development strategy.
Speaking yesterday in Mangochi during the opening of the 2022 Economics Association of Malawi (Ecama) Annual Economic Conference, the minister acknowledged the long-held assertion that Malawi is good at policy or strategy development, but fails at implementation.
Said Gwengwe: “Therefore, there is need to double our efforts to accelerate the implementation of various policies and programmes.
“Government cannot do it alone. It is a shared responsibility.”
The minister said government is implementing necessary structural, fiscal and monetary reforms that have been avoided for some time.
He said government has broken away from a legacy of unsustainable policies to help restore macroeconomic stability to achieve MW2063.
In view of this, Gwengwe outlined four structural reforms—fiscal and monetary policy, harnessing the demographic dividend, protecting the poor and foreign exchange generation—to rejuvinate the economy, whose gross domestic product (GDP) growth rate this year has been cut to 1.7 percent from an earlier projection of 4.4 percent.
On fiscal and monetary policy reforms, he said government is keen to reduce unsustainable borrowing, which has over years increasied the interest bill, thereby eroding the fiscal space needed for social spending. Government debt stock is currently at K6.38 trillion, according to Treasury figures
Said Gwengwe: “This heavy borrowing, particularly on the domestic market, has also been crowding out the private sector investment.
“Going forward, we have elected to reduce the budget deficit as well as achieve efficiencies in our spending.”
On the monetary side, he said government is realigning the policy and exchange rate with market fundamentals as part of the wider reforms under the proposed International Monetary Fund’s Extended Credit Facility.
With regards to harnessing the demographic dividend, Gwengwe noted that Treasury has provided more money to the youth and women through National Economic Empowerment Fund to crowd in small businesses.
Amid the economic fallout, he said government is also protecting the poor by cushioning them through the provision of social protection programmes that are shock-sensitive.
Gwengwe said on foreign exchange generation, government is banking on the National Export Strategy (NES) II “to unlock the full export potential of this country by strengthening existing industries and accelerating the emergence of new export-oriented manufacturing and value-added services”.
Ecama board of trustees chairperson Wilson Banda said the conference is important as it will provide a platform to discuss the successful implementation of MW2063.
He said changing the country’s development status requires collective effort.
“One of the ways in which we encourage economic policy discussion is through our annual conferences, which target economists and other stakeholders, including development partners, government officials, private sector, civil society organisations, academia, policy makers and the general public,” said Banda, who is also Reserve Bank of Malawi Governor.
He said Ecama is implementing a project that seeks to improve public financial management with Oxfam in Malawi and Lilongwe University of Agriculture and Natural Resource.
In her remarks, Ecama president Lauryn Nyasulu echoed what Gwengwe said that Malawi is not short of well-crafted policies and strategies, but challenges are on implementation.
“Statistics on poverty, inequality and human development validates this perspetive and poverty in Malawi has remained pervasive,” she said.