MSE rues cyclone freddy effects on markets
Malawi Stock Exchange (MSE) has expressed fear that the effects and damage brought about by Tropical Cyclone Freddy could affect market performance.
MSE operations manager Kelline Kondowe in a written response on the market performance and prospects indicated that the market is vulnerable to the effects of Tropical Cyclone Freddy.
“There are a number of downside risks to the market but key is the impact of Cyclone Freddy which has the potential to negatively impact performance of some entities.
“We will have to see how some of the
risks translate in terms of how they impact performance of the listed companies,” she said.
As of Thursday 511 people were reported dead due to the cyclone, with 562 415 displaced. The cyclone which hit the country last week has also caused extensive damage to roads, bridges, houses, crops, water pipes, electricity poles and other infrastructure.
Apart from disrupting water and electricity services, the cyclone also disrupted service delivery and business
funding has also gone up, limiting recourse to that alternative.
“The funding squeeze is all the more problematic because countries have emerged from the pandemic with elevated levels of fiscal deficits and public debt,” he said.
On her part, IMF managing director Kristalina Georgieva said a government’s ability to address development spending needs is bounded by the amount of revenues that it raises, its ability to supplement this by borrowing from either domestic or external markets, and any aid resources (grants and
concessional borrowing) it has access to.
She said: “While such shocks do require governments to step in and protect the most vulnerable, actions to gradually reduce fiscal deficits will be crucial in most countries to rebuild buffers, protect debt sustainability, and ensure macro-economic stability,” she said.
In the 2023/24 fiscal plan, Treasury projects the budget deficit at K1.32 trillion or 8.7 percent of the gross domestic product (GDP) while total revenue are estimated at K2.55 trillion.
Minister of Finance and Economic Affairs Sosten Gwengwe said the deficit will be financed through foreign borrowing amounting to K288.78 billion and domestic borrowing amounting to K1.19 trillion.
He said: “In the 2023/2024 financial year, the main focus of the budget is to progressively continue containing the budget deficit.
“The 2023/2024 budget continues to address issues of public debt management, fiscal consolidation, ensuring prudent and efficient use of public resources to achieve value for money, export diversification and import substitution, strengthening the balance of payment position as well as promoting local manufacturing.”
