The World Bank s has aid in a report released on Tuesday that Malawi’s economic development shows that the country’s economy continues to grow at a moderate pace and has been urged to address “significant challenges.”
The Washington-based lender’s report said Malawi’s Gross Domestic Product (GDP) will not be overly affected by the floods that hit the country early this year.
It said, however, the economy is characterized by macroeconomic instability and barriers to trade which government needs to act on to improve growth prospects.
“With these significant challenges, Malawi needs to prioritize the restoration of macroeconomic stability through such actions as reducing the size of the budget deficit, scaling back domestic borrowing, and reforming key subsidy programs particularly the fertilizer input subsidy,” Richard Record, Senior Country Economist for Malawi and lead author of the report.
He adds that government should continue implementing public financial management reforms to rebuild confidence in the integrity of Government accounts.
“This means the country has to trade an increasingly large volume of exports to pay for the same volume of imports. But Malawi has a real opportunity if she reduces her trade costs,” says Mombert Hoppe, Trade Economist for Malawi and contributing author.
Malawi’s Finance, Economic Planning and Development Minister Goodall Gondwe conceded that said the country’s economy is passing through ‘turbulent times’, huge amount of domestic borrowing and uncertainty over the resumption of budget support.
Gondwe, however, sounded confident that the economy would shift to ‘normality’ as government is currently in constant engagement with development partners for a possible resumption of budget support and other technical support aimed at fixing the bruised economy.
Gondwe blamed the mess on the looting of public funds at Capital Hill dubbed Cashgate, which he said had disturbed the path the economy had taken.