Mutharika on reset to improve economy: Malawi passing through ‘turbulent times’
Malawi President Arthur Peter Mutharika has said he will not be distracted as he focus on improving people’s lives by hitting the reset button of governance to improve the economic situation.
The country has been on economic downward spiral which the President conceded in his year-end State-of-the-Nation feed from Kamuzu Palace in Lilongwe that was beamed on radio and television stations on Saturday night.
Mutharika said his DPP government inherited huge domestic debt and enormous arrears owed to providers of goods and services to the government from the Joyce Banda administration which he was rebooting the ills.
“High political aggrandizement, self-glorification, and massive corruption were characteristic of most of the period between mid-2012 and May 2014. Further, the pride and confidence of the Civil Service was fast waning off,” pointed out President Mutharika.
He attributed the current economic turmoil due to cashgate corruption scandal, saying his government “inherited empty coffers.”
The Head of State pointed out that due to cashgate, cooperating partners withdrew their budgetary support to the country and his administration is running on zero-aid financial plan.
“It is common knowledge that Malawi is now operating without general budget support, meaning we have to rely more and more on ourselves to deliver the services that Malawians need. Moreover, in the spirit of good economic governance, we can only spend what we have,” said Mutharika.
“It is against this background that my government does not allow unplanned expenditures, and has stepped up efforts to deepen adherence to the existing economic governance laws,” he added.
He noted that the local currency, Kwacha, has been losing to a quarter of its value in relation to the US dollar, and the impact shows strongly through inflation arising to the associated rising costs of imports.
“This inflation has exerted pressure on interest rates, hence lowered private investment and employment. Much as seasonality explains part of the kwacha depreciation, a significant part of it is attributable to speculation,” said Mutharika.
The President said he has “better news” for Malawians.
“The Kwacha has since stabilized,” he disclosed.
“I am hopeful that the domestic currency may even appreciate soon, because we are doing everything possible to get the economy on the right track,” said the President.
He informed that his g government has put in place policies that will translate into increased exports in order to increase foreign exchange earnings which are needed to defend the domestic currency.
Mutharika said despite challenges facing the Malawi economy, “the financial system has stabilized and developments are visible in the financial institutions and the capital markets.”
The Malawi leader, however, pointed out that the risks to the economy continue, and the government is specifically working its way forward with the uncertainty regarding the resumption of budgetary support, delayed donor inflows, and low tobacco prices.
“Inflation remains a risk that has to be tamed, moving forward.”
He said DPP government is “very determined” to turn Malawi’s ailing economy round.
Mutharika said Malawi economy will grow by an average of 5.5% in 2014, from an estimated 5.0% in 2013.
“This rate is agreed by the International Monetary Fund (estimated 6.12% growth), the World Bank (4.4%), and the Reserve Bank of Malawi (6.3%),” he said.
He also beckoned investors to consider Malawi, assuring that his government will provide “the environment that will make businesses flourish” and create a win-win situation between private investor and the government.
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