Make tough Decisions—EU
European Union (EU) Ambassador Rune Skinnebach says the country needs to make tough economic decisions to stand on its own amid world economic challenges. The EU envoy said with various challenges facing the world, such as the Russian aggression in Ukraine, Malawi cannot continue to rely on help from outside.
Speaking to journalists in Blantyre on Thursday, Skinnebach said tough decisions are particularly important in such an economic situation, which is characterised by challenges such as the Covid-19 pandemic, cholera outbreak, polio, fiscal and forex crises as well as debt crisis.
He said: “We must rely on ourselves, we must rely on our courage, our resilience and maybe on a legislative framework that is reshaped, reformed, changed and adapted to ensure that we can have the growth that we need so badly. We need a conducive climate for businesses and for foreign direct investments.
“In November, we were hoping to have an Extended Credit Facility from the IMF [International Monetary Fund]. Now the spring meetings in Washington are over and they don’t bring much hope in that regard. So, the burden is on us here in Malawi, we cannot rely on help coming from the outside.”
Skinnebach said to achieve this, Malawi should also step up its fight against corruption, as well as come up with good legislation that will help boost the tourism sector which, he said, could be another source of forex for Malawi.
He said: “We need to eliminate the red tape. We need to make the legislative framework conducive. We need to see what we can do to amend the land reform Bill so that mega farms have a better chance of materialising.
“We need to do something to ensure that the economy is thriving and that there is consistency between the legislative framework and the Malawi 2063 aspirations because without that consistency, I’m afraid it’s not going to happen.”
Skinnebach said the terrible effects of Cyclone Freddy speak volumes of the vulnerability of the Malawi population; hence, the need to build resilience.
He said he had discussions with the World Bank and United Nations on post-disaster needs assessment and have agreed to support Malawi to help with its recovery plan.
So far, EU has invested 700 000 euros or about K700 million allocation for water and sanitation in disaster-affected districts.
The humanitarian early recovery support for the EU in Malawi combining funds for cholera and Cyclone Freddy amounts to 7.2 million euros or about K8 billion.
On November 21 2022, the IMF board of directors approved a disbursement of $88.3 million (about K91 billion) through a Rapid Credit Facility (RCF) initialised through the Food Shock Window.
According to Minister of Finance and Economic affairs Sosten Gwengwe, the emergency financing was aimed at helping Malawi address the urgent balance of payment and fiscal needs related to the global food crisis.
The Tonse Alliance cancelled the previous ECF signed by the former Democratic Progressive Party administration to align the programme with the current regime’s development agenda.
However, negotiations for a new ECF programme have stalled, pending the development of a debt restructuring strategy and an investigation into misreporting of financial reserves by the former administration
