Goodall reviews economy in 2014
Malawi’s Finance, Economic Planning and Development Minister Goodall Gondwe has given a mixed rating on the route the domestic economy passed through in the just-ended year.
The minister, speaking exclusively to Business Review in Lilongwe on Tuesday, said the Democratic Progressive Party (DPP)-led administration had inherited economic woes mid-year but said towards the end of the year, government progressively overcame the challenges.
“As you know, in the year 2014, the most important thing is that it is when we came into government. Between May and December 2014, we have had a very smooth progress of the budget and so we are looking at the year 2014 with mixed feelings,” said Gondwe.
He said when DPP won elections, its government found that because of Cashgate, the donors had decided not proceed with supporting Malawi with budgetary support.
Bilateral donors provide at least 40 percent of budget resources.
Gondwe said government also found a huge amount of arrears amounting to K158 billion and a domestic debt overhung of K340 billion, that were left behind by the former government.
Said the minister: “And therefore, the sailing place was that the budget that we came up with [the 2014/15 budget], was a very realistic one as it did not take into account budgetary support.”
“We are in January and government is there. Resources are there, people are being paid, government projects are working out and government business is being carried out, which means we are in fact succeeding to run government without donor support. It is possible for us to do that.”
He said the International Monetary Fund (IMF) mission that was in the country in November came again in December 2014 to complete negotiations with government.
The completion of such negations with the fund, according to Gondwe, means that government will actually be working within the framework of the IMF programme, the three-year Extended Credit Facility (ECF).
“This means that we are assured that the running of government will have resources and we are assured that government will continue to run smoothly until the financial year ends in June 2015,” he said.
Towards the end of last year, Gondwe admitted that the economy was passing through “turbulent times”, citing a sharp fall in the value of the kwacha against other major currencies, huge amount of domestic borrowing and uncertainty over the resumption of budget support as some key economic challenges haunting his office.
Economics Association of Malawi (Ecama) president Henry Kachaje recently said the economic challenges that Malawians faced in 2014 will spill over to this year.
