Next budget to spur healing of economy—Lipenga
Malawi’s Finance Minister Ken Lipenga has said it is pleasing that most macroeconomic indicators at the moment have picked up and has hinted that the 2013/14 budget will aim at enhancing the healing of the economy.
But the minister has admitted that the economy has not yet reached an ideal situation although headline inflation has started to decline and foreign exchange has improved marginally.
“The increased availability of foreign currency has resulted in ongoing appreciation of the kwacha since April 10th, against most major trading currencies, and if sustained this should translate into lower non-food inflation in the coming months,” Lipenga told Business News in the capital, Lilongwe on Wednesday.
Foreign currency availability has improved on the market with official gross reserves piling up to $206 million (or one month and 10 days of import cover) as at 26th April, 2013, from a low of $190 million (or one month and one day of import cover) as at 19th April, 2013.
Malawi’s monthly foreign reserve requirement is pegged at $188.1 million, according to the Reserve Bank of Malawi (RBM).
He observed that the improvements that are beginning to show in the economy are happening despite some strong pressures that have been exerted on the budget.
The minister said although the country has not reached an ideal situation, foreign exchange availability has improved due to a combination of two factors, namely, tobacco sales and sound macroeconomic policies.
Lipenga cited strong tobacco sales in week seven of trading which he said wired in $57.1 million compared to $22 million during the same period last year.
Added the minister: “There could never be a greater expression of confidence than this.
“Financial discipline continues to be crucial in the implementation of the budget and the ERP, and this will also inform the preparation of the 2013/14 budget, which will be aimed at enhancing the healing of the economy.”
Commenting on the performance of the Malawi Stock Exchange (MSE), Lipenga said the market has also recently experienced strong performance which he said reflects increasing confidence in the Malawi economy.
He said from 1st January to 31st March, 2013 a total of 2,101,338,035 shares were transacted at a total consideration of K3 billion ($7.4 million) in 179 trades as compared to a total of 66,386,492 shares at a total consideration of MK760.8 million ($4.6 million) in 384 trades transacted during the corresponding period last year.
In recent times, the domestic economy has started showing signs of stability with the Kwacha gaining value to a dollar backed by improved supply of foreign currency on the market.
Yesterday, for example National Bank of Malawi (NBM) was buying a dollar at K370 and resold it at K390 from around K420 mark it was selling two weeks ago.
On one hand the headline inflation rate for the month of March eased by one percentage points to 36.5 percent backed by improved availability of maize in most parts of the country.
The dramatic improvement in the economy has since brightened RBM boss Charles Chuka who has said the development is a signal that monetary policy implementation by the central bank is yielding expected results.
“Given adequate time, good policies work always. Consistent implementation of a package of fiscal and monetary policies is producing expected outcomes,” said Chuka.
