IMF says Malawi economy to grow 7%: ‘Covid-19 potential for deeper disruption’

Malawi’s economy recent economic performance has been favourable and the International Monetary Fund (IMF) says it is likely to expand by 6-7% this year, notwithstanding the effects of coronavirus on its economy.

IMF Mission Chief for Malawi, Pritha Mitra: With the evolution of the COVID-19 outbreak still largely unknown, the economic outlook is subject to substantial uncertainty.

IMF mission chief for Malawi Pritha Mitra  said late on Tuesday that inflation is expected to fall to 9.3% in 2020 from 11.5% in 2019/

In a statement at the end of an IMF staff visit, Mitra said economic growth will be supported by “infrastructure that is more resilient to shocks from climate change, improved access to finance, crop diversification, and an improved business climate.”

Inflation will decline as elevated food inflation moderates, gradually converging to 5% over the medium term.

Malawi’s economy is largely reliant on sales of tobacco, tea and sugarcane, with growth having slowed in recent years because of an El Nino-induced drought, electricity shortages and political uncertainty.

Hwowever, IMF praised the authorities for regaining control over the budget in the first half of financial year 2019/20.

“The authorities are deploying measures to enhance spending efficiencies and address revenue shortfalls in the current fiscal year and they expect to shift to a positive domestic primary balance in the coming years.

“ They are committed to repaying arrears accumulated in recent years and addressing shortfalls in the system that led to them. The government will continue enhancing tax policy and revenue administration. Strengthening transparency in the budget process, the medium-term budgetary framework, cash management, and routinized bank reconciliation as well as gradual upgrading of the existing public financial management system will be critical,” reads the statement.

IMF pointed out that monetary policy remains focused on preserving price stability over the medium-term.

“ Banking system resilience continues to improve, with non-performing loans (NPLs) declining over the last three years and improved provisioning. Credit to the private sector has picked up in recent months but sustainably increasing access to finance will require addressing structural barriers, such as challenges with the collateral registry, mobile banking, and property rights.”

But  IMF said maintaining this performance for the second half of the fiscal year will be challenging.

“Pressures from COVID-19 and political uncertainties ahead of the new Presidential elections are weighing on revenues,” Mitra said.

“Malawi’s debt has risen but both its external and overall risk of debt distress remain ‘moderate;.”

In January, Malawi’s central bank said gross domestic product would grow by as much as 6% in 2020 as the country recovered from drought and agricultural output rose.

IMF said it held meetings with Minister of Finance Joseph Mwanamvekha, Governor of the Reserve Bank of Malawi (RBM) Dalitso Kabambe, other senior government and RBM officials, a broad range of national stakeholders outside government, as well as representatives of Malawi’s development partners.

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mchisala
Guest
mchisala

It is dangerous to leave the assessment of your economy in the hands of the clueless IMF!!! It is difficult to proffer the stability of the Kwacha as a sure sign the economy is on the upswing because in most instances it may also mean we are not importing as much (demand for forex is not as high, meaning industry is not revving up). A low inflation rate may also not be a reliable sign because our rate gives to much weight to maize prices (only rate in the region weighting maize as high as 30-50%) which has very little… Read more »

Chiombagaga
Guest
Chiombagaga

Mr. Lincoln, please together with your Prodigal pastor (Chakwera) learn to appreciate where it is due. Malawi’s economy has improved significantly since the coming in of APM into government. The Kwacha is stable thereby making prices of goods and commodities stable on the market. IMF cannot be bought or influenced the way opposition did with Concourt Judges. They speak the truth whether it pains or not. Mwaiwala kale momwe zinthu zinalili nthawi ya Cashgate government? Have you forgotten daily increase of fuel and commodity prices. If truth be told, Malawi is moving forward with APM. AWINANSO

Prophet Justice
Guest
Prophet Justice

So we have to wait for someone in some country to tell us how our country’s economy will grow! Nonsense, pure neoliberalism.

Dr. Mvuma
Guest
Dr. Mvuma

This is the problem IMF has had for a long time. It says the economy is growing yet Malawians are now in dire Poverty than ever since independence. What type of growth is IMF talking about? Meaning retrogressive growth? This is why some countries do not want to have anything to do with IMF.

Jemusi
Guest
Jemusi

Please stop lying. How can an economy that grows at 7% have such high unemployment.

Noxy
Guest

Only those with no eyes cannot see this growth Bravo APM May The Good Lord Give you more life to live to shame your enemies mpaka awone nyekhwe.Bravo IMF for speaking the truth.

Girl lady
Guest
Girl lady

mwayi ife akumudzi sitidzitsata izi, zanu zimenezo njala ili kuno kumatiuza zanuzo nxaaa odi katole maungu munda ndiphike

NOT RELEVANT NOW
Guest
NOT RELEVANT NOW

IMF, So what? We are used after all.

lincoln
Guest
lincoln

More nonsense from IMF.

7% growth which does not translate into any fruitful tangibles/intangibles for the poor masses. Cooked up figures by another inept organisation like the EU crooks, who wanted to sabotage the outcome of the elections court case, only to be sent back by brave Malawians.

We match on! Fixing the country!

Phiri
Guest
Phiri

Well done President Peter Mutharika. You have performed exceptionally since coming to power in 2014. Keep it up and continue to make our economy grow.

Keith
Guest
Keith

Which economy is growing? What indicators are you taking into account? With how much has your disposable income increased since 2014? Zinazi muzaombera nazo mmaja nfiti

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