World Bank, others see economy stabilising
The Malawi economy is stabilising and on course to achieve high growth rates, but electioneering and weak responses to inevitable shocks could derail progress, experts agreed yesterday.
The observations were made when the World Bank launched the 18th Malawi Economic Monitor (MEM) in Blantyre titled ‘Turning the Corner?’ which suggests that the economy would grow by three percent in 2024.
The report says Malawi has taken bold steps to stabilise the economy, although 2023 saw low growth at 1.6 percent and macroeconomic imbalances continue in 2024.
The bank has since tipped Malawi to take urgent action and sustain reforms to consolidate the stabalisation of the economy, enhance growth and protect the vulnerable.
Further, the report suggests that the government should bolster macroeconomic stability by, among others, focusing on rebuilding foreign reserves, enforce fiscal discipline and improve debt management which increased to 81.3 percent in 2023 from 75.7 percent.
It also calls for the creation of foundations for export-led growth mostly by stimulating growth of the agriculture sector through advancement of Affordable Inputs Programme (AIP) and commercialisation initiatives as well as building resilience and protecting the poor.
Reads the report in part: “It will be essential to move forward with the implementation of the expanded social cash transfer and climate-smart public works programmes as well as strengthen the functioning agricultural markets.”
In his remarks, World Bank country manager Hugh Riddell said Malawi’s fiscal situation had grown “ever more precarious”, the debt is in distress and continues to rise, thereby stifling the private sector.
“Inflation stands at more than triple the rate than when I first arrived [in 2020] and the human suffering is real.
“Nine out of 10 households are adopting negative copping strategies, including selling assets and skipping meals, as a response to mounting food security challenges,” he said.
However, Riddell said he believed the government has taken some steps in addressing the prevailing challenges such as shifting the 2024/25 National Budget from stabilisation to recovery, commitment to fiscal consolidation, unifying exchange rate and AIP reforms.
“More broadly, we see now a clear line of sight to sustainable growth model anchored in the energy transition minerals and large-scale commercial agriculture,” he said.
Taking his turn, Secretary to the Treasury Betchani Tchereni said there are several efforts that would improve the economy, including rationalising revenue collection and focusing on production to boost exports.
Commenting on the budget, he said the deficit was brought down to K1.4 trillion, less than the K1.645 trillion that the International Monetary Fund (IMF) predicted.
“That is a miracle on its own to get to that figure we need to consider revenue rationisation but also look at issues of expenditure,” said Tchereni.
He said foreign debt was being restructure and that government borrowing has been for investments not other recurrent transactions.
Malawi University of Science and Technology economics professor Bertha Bangara-Chikadza said there is need to implement tough decisions on fiscal policy to reduce debt.
“Sometimes the government gets the needed recommendations, knows what to do, but falls short in implementation,” lamented Bangara-Chikadza, who is also Economics Association of Malawi acting president.
Malawi Trade and Investment Programme team leader Daisy Kambalame stressed on the investment aspect of the economy, saying the mining sector could foster the economy.
MEM is a semi-annual publication and the 18th edition had a special topic ‘Healthy watersheds for a stronger economy’ which attracted Minister of Water and Sanitation Abida Mia to be the guest of honour at the event.
