Malawi economy to grow by 5%: Reserve Bank urges end of demo, maintains policy rate at 13.5%

Reserve Bank of Malawi (RBM) has announced that it has maintained the policy rate—also known as the bank rate—at 13.5  percent and that the country’s economy is expected to grow by 5% this year, up from 4% the previous year.

RBM  Governor, Dalitso Kabambe said this to reporters in Mzuzu at the Reserve Bank Mzuzu branch after his presentation of the third Monetary Policy Committee (MPC) resolutions.

He said the MPC has maintained the policy rate, the rate at which commercial Banks borrow from the Central Bank, at 13.5 per cent as means to support diversification and higher economic growth.

The MPC also said that Malawi has for the first time managed to anchor non food inflation to a single digit and also projected that it will remain low supported by relatively tight monetary policy as well as continued stability of the exchange rate.

“But it is our projection that Malawi will maintain a single digit inflation at least for the next 36 months as emerging risks the effects of Cyclone Idai and the elevated prices of maize are deemed temporary,” he said.

Technically, inflation refers to the rate of the general rise or movement in prices of goods and services consumed in an economy. It is also defined as a general and sustained rise in the level of prices of goods and services.

In his numerous addresses, President Peter Mutharika highlights the single-digit inflation rate among his administration’s achievements in terms of economic management.

Kabambe also said Malawi’s economy  expected growth by 5% this yearis  in line with IMF projections, boosted by better agriculture output.

President Mutharika had promised to grow the economy by at least 7 percent a year between this year and 2024.

Meanwhile,  Kabambe made an impassioned implicit plea tothose holde demonstrations demanding the resignation of the head of the Malawi Electoral Commission (MEC), Jane Ansah to consider ending the violent protests.

Human Rights Defenders Coalition (HRDC), organizers of the protests, accuse Ansah of mismanaging the May polls.

Governor Kabambe warned that if the post-election protests continue their impact on the economy will be quite significant in the long term.

Kabambe said losses will be across the board from government, small scale businesses and the private sector.

“One day of demonstrations means companies, government and other business would have lost revenue and yet by the end of the month they will have to pay workers, remit taxes and pay for utilities. We hope this issue would be resolved amicably and sooner,” Kabambe said.

The merchants also say violent demonstrations hurt their businesses.