Malawi’s economy on the mend from DPP mess – JB

  • Let’s get real, economy growth to nose dive  -Reserve Bank governor

  • Malawi will cut its forecast for economic growth- Finance Minister

Malawi President Joyce Banda has assured that the country’s battered economy will be revived, pointing out that she is resuscitating the sick economy which was choked by the previous DPP regime.

Banda said the country’s agriculture-dominated economy was battered by withdrawal of aid by donors, serious shortages of foreign exchange and immeasurable abuse by previous administration.

Mess

The 62-year-old former entrepreneur speaking in Mzimba in remarks monitored on national broadcaster MBC, said her administration had laid down achievable economic plans to resuscitate the economy, reiterating that when she rose to the position of President and formed government, the national coffers were almost empty.

President Banda: Making efforts to rebuild Malawi economy

“It is an open secret that the economy was in a total mess when we came in; what we are doing now is to repair that damage,” she said.

“It is unfortunate and callous for some people to take advantage of the illiterate Malawians to distort the facts and blame the economic mess on me and my new government.

“The most fortunate part is that however illiterate some Malawians may be, they are still wise enough to realize the falsehood of our adversaries,” she said.

Devaluation

President Banda also defended her government decision to devalue the Malawi currency, the kwacha, and let it float according to market  trends.

The late President Mutharika – a former World Bank economist – resisted to devalue the kwacha because, according to him, that would hurt the poor for prices of goods would shoot right through the roof.

But less than a month after assuming office the Banda administration announced a 49 per cent of kwacha and allowed it to float. This resulted in a run on commodity prices.

President Banda defended the decision, saying her predecessor’s resistance to devalue the kwacha did not help the economy.

”We had no choice but to devalue,” she said. “Now the donors are back.

Gloomy

Menawhile, Reserve Bank of Malawi governor Charles Chuka said the country’s economy, will nosedive to 1.6 percent, from 4.3 percent this year owing to  “contraction in some major sectors.”

Chuka said “on the basis of the estimates we knew in the first quarter of the calendar year, we had estimated and thought that GDP would grow at 4.3 percent.

“We now know after the second round of crop estimates in particular, that we are now looking at 1.6 percent growth this year,” he told business journalists in Lilongwe.

The cenrral bank governor said due to a drop in foreign receipts of tobacco, from $430 million in 2010 to $177 million in 2012, and a drop in maize and cotton production, there was a “supply shock” which was coming at the wrong time.

And Finance Minister Ken Lipenga said Malaw’s economic performance “will slow down below our earlier projection of 4.3 percent largely due to a significant contraction in agriculture, manufacturing, forestry and fishing, which have experienced a negative growth.”

But Lipenga remained optimistic the economy would recover strongly in 2013 with agriculture, manufacturing and the retail sectors leading the way.

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