After inheriting a ‘tattered and bankrupt economy’ Mutharika ecstatic with IMF 7% growth forecast for Malawi

President Peter Mutharika has said that he is pleased that after he inherited a “tattered and bankrupt economy” from his predecessor, Joyce Banda,  he has  managed to reverse many of the economic woes and is setting Malawi  on a path of sustainable growth with new predictions by the International Monetary Fund (IMF) signalling further positive outlook and robust trends in the economy.

Mutharika said in his brief address to journalists at Kamuzu International Airport   when he arrived  home from the United States of America (USA)  that he has presided over  a  significant economic transformation which the country has seen in his four-year reign.

When Mutharika came to power in 2014, he inherited a country mired in the Cashgate corruption scandal, rising inflation, and the withdrawal donor funding, which left a 40 percent gap in the country’s budget.

At that time, growth stagnated at 2.4%, inflation was at 24% and the local currency was volatile with businesses struggling with insufficient forex import cover.

A year into government, Malawi suffered floods and famine. This was followed by a severe drought in the second year of the administration.

These factors regardless, Mutharika has streered the economy out of the doldrums, making it one of the best performing in Southern Africa in 2017.

“Within four troubled years, we have reduced inflation from 24 per cent to a single digit. We have reduced interest rates from 25 percent to 16 percent. We have taken our import cover from the lowest point to the highest point in our economic history. Our import cover has risen from below two months to six months. We have made local currency stable and predictable,” he said.

The IMF has also  predicted that Malawi’s inflation shall remain in the single digit in 2018 and further projected  inflation to fall down to 5 percent in the medium term, which will be the lowest  fall ever.

In addition, the IMF has predicted economic growth to go up to 7 percent. This will keep Malawi’s economy as one of the top performing economies in Southern Africa.

The IMF authoritative predictions means Malawi’s economy is firmly studded to be one of the fastest growing economies few years after the Mutharika government salvaged it from a crisis.

The swift recovery of the economy have made others to describe Malawi’s economy as ‘a miracle’.

In a statement released after a week-long assessment of the economy, the IMF Mission for Malawi notes the positive strides in the economy.

“Malawi’s economy continues to grow while inflation remains on a declining trend. Moderate economic growth is likely to strengthen to about 4 percent in 2019, followed by a rise to 6-7 percent over the medium term,” reads.the statement by the IMF led by Pritha Mitra.

The IMF further acknowledges Malawi’s positive performance in its program, to the extent of “significantly overperforming” in some sectors.

“Performance under the program has been good. Most quantitative performance criteria (QPC) for end-June were met, with the criteria on international reserves and the Reserve Bank of Malawi’s holdings of government securities significantly overperforming,” observes the IMF.

The Bretton Woods institution also hails the Government’s monetary policy management measures to keep inflation down and efforts aimed at ensuring that prices of commodities remain stable.

“The RBM’s (Reserve Bank of Malawi) vigilance and adoption of new regulatory measures has resulted in a significant reduction of non-performing loans and increased provisioning,” it says.

This means there is now reduction in default in loans such that lending institutions are now able to cut on sums they would need to set aside to deal with loan default losses.

The assessment by IMF  is a positive rating to President  Mutharika’s economic management measures.

IMF has consistently given Malawi a positive rating since 2016.

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