Gwengwe says tough measures ahead of MCC
Government has indicated that it has to make some tough decisions to restore macroeconomic stability going forward.
Speaking in Lilongwe yesterday during a press briefing to discuss steps following the signing of the $350 million Millennium Challenge Corporation (MCC) Malawi Transport and Land Compact, Finance Minister Sosten Gwengwe said the process will not be a simple one and that it will not be done miraculously.
According to him, government already has a roadmap which he said it is discussing with the International Monetary Fund (IMF) to see what policies need to be pursued adding that the same would also have to be evaluated and scrutinised by experts from MCC.
Said Gwengwe: “The discussion with IMF is very crucial because it encompasses the fiscal but also macroeconomic framework that the country must be following from now going into the medium term, so that the economic imbalance that the country is going through right now is corrected. It is not a simple process and it cannot happen by a flick of fingers.”
The minister pointed out that the shocks that the country has gone through in the past months such as food shortages and the energy crisis have greatly affected the economy by reducing the private sector’s capacity to produce and grow.
He stressed that it is therefore important to be more resilient by not having recourse to commercial borrowing externally.
Commenting on Malawi’s Extended Credit Facility (ECF) programme with IMF, US Ambassador David Young said his government admires and appreciates the strong efforts by the Malawi government to move forward on negotiations with IMF.
He said President Lazarus Chakwera’s recent visit to the US was key in helping to ensure that the IMF team should come to Malawi for the next round of negotiations and discussions.
Said Young: “Things are moving forward; progress is being made and the US government stands ready to support the process and therefore looks forward to statements coming up soon that will talk about moving forward towards a path to an Extended Credit Facility. There is hard work ahead and it will take some time but movement forward is happening and the US supports it.”
Meanwhile, Gwengwe has indicated that a task force to oversee implementation of the MCC has been instituted and that the enabling legislations are being put in place.
He gave an example of the Seed Bill, which was passed in Parliament, and that government will be tabling the Fertiliser Bill and Roads Bill during the next sitting of Parliament in November, which are required for the smooth implementation of the compact.
The signing of the compact was attended by President Chakwera in Washington DC, United States of America.
The compact will focus on increasing land productivity through sector reforms, improving road infrastructure to reduce transport costs from farm to market and incentivising private investment into inclusive agriculture products.
The project’s brief shows that the compact will seek to promote agriculture commercialisation with a focus on rural communities, who will be linked to the commercial value chain.
Reads the report in part: “This is to be achieved through the facilitation of inclusive agribusinesses, provision of technical assistance, and establishment of a facility that will assist smallholder farmers, particularly women, to access finance.
“A further activity, christened Competitive Transport Activity, aims to construct secondary and link roads to facilitate farm to market access.”
Under the project, selected roads in rural areas will be improved to bitumen standard while some will be gravelled.
Five roads earmarked for upgrading under the compact are Mzimba-Euthini via Chakazi Bridge and Bulala, Euthini-to-Kacheche in Mzimba via Mzambazi, Mpherembe and Vwaza Marsh Wildlife Reserve as well as Likuni-to-Namitete via Malingunde and Phirilanjuzi in Lilongwe, and Kasungu-to-Mkanda in Mchinji via Mwase. There is also the road from Chantulo in Mangochi to Khwisa in Balaka via Nankumba and Eastern Bwanje (Ntcheu).
