World Bank tips govt on growth
Outgoing World Bank country manager Hugh Riddell says a strong commitment to fiscal reforms can improve Malawi’s resilience to climate-related shocks and create conditions for sustainable economic growth in the medium to long-term.
Speaking yesterday in an interview at the World Bank office in Lilongwe, he urged local authorities to commit to the reform programme signed with the International Monetary Fund (IMF) to develop fiscal buffers and forex reserves to enhance the country’s resilience to prospective shocks.
Said Riddell: “The previous cyclones were damaging, any country that loses a third of its energy supply will have economic problems. But the effects of the cyclones were more pronounced because the government did not have a fiscal buffer or forex reserves to cope with the crisis.”
His sentiments come as Malawi is grappling to recover from the impact of the effects of four tropical cyclones—Idai, Ana, Gombe and Freddy—in the past five years.
Riddell, who is scheduled to leave the country next week, further argued that the economic fallout caused by Cyclone Freddy created some fiscal deficits and shortages of forex that have worsened the country’s economic position.
He said: “The fiscal deficits have led to extensive government borrowing from the local private sector. Malawi has racked up the highest domestic debt on the continent in the past five years. It is pushing up inflation, which is in turn, affecting people locally.”
On a positive note, Riddell commended Malawi for its resilience in the face of adverse shocks and further commended the government for reforming the social protection programme to make it more responsive to emerging needs and committing to bold structural economic reforms to foster growth.
He, thus, urged the government to leverage its vast water resources to ease its dependence on rain-fed agriculture and invest in local energy projects to promote energy security in the country.
Said Riddell: “Our Agcom [Agriculture Commercialisation] is providing the financing to incentivise commercial banks to increase their lending to ventures in commercial agriculture. The banks should channel their investment to these areas to promote growth.”
Reacting to the sentiments, Mzuzu University agriculture economist Christopher Mbukwa said the Agcom project has developed the capacity of local farmers to respond to markets by helping them identify off-takers before production.
“The programme also promotes long-term investment on the land by ensuring that the groups own landm” he said.
Government has earmarked agriculture, tourism and mining, dubbed the ATM Strategy, as the key sectors to drive economic growth.
