Breaking News:

Big Issue Slide, Big Issues, News

Malawi off-track, slash MK900 billion budget, GDP growth to fall – IMF

0

The International Monetary Fund (IMF) has declared that Malawi’s Extended Credit Facility is off-track, calling for immediate remedial measures to be implemented. The Briton Woods institution has recommended that government should among other things slash the current fiscal year’s MK900 billion budget.

A team from the International Monetary Fund (IMF), led by Mr. Oral Williams, visited Lilongwe September 16–30, 2015 to conduct discussions for the 2015 Article IV Consultations,1 and to discuss progress under the Extended Credit Facility (ECF) arrangement.2 At the end of the mission, Mr. Williams issued a statement:

“The Malawian economy is facing difficult challenges due to  shocks.  As a result, a looming food crisis is expected to negatively impact an estimated 2.8 million persons. Real GDP growth is projected to fall to 3 percent in 2015 from 5.7 percent in 2014, reflecting the steep decline in  addition to weak private sector investment and consumption. Growth in credit to the private sector remains negative in real terms, and declined further in the face of ongoing economic uncertainties, persistently high inflation, and tight bank lending conditions,” reads the statement.

According to the statement, After a period of stability since end-2014, the exchange rate against the dollar weakened from end-June to the beginning of September, before stabilizing. These developments in part reflected the strengthening of the dollar against most major currencies and excess demand for foreign exchange to finance imports.

“Program targets on net international reserves and net domestic assets of the Reserve Bank of Malawi for end June 2015 were met. However, fiscal slippages equivalent to about 2 percent of GDP emerged in part because of overspending on the wage bill, and these were exacerbated by revenue and external financing shortfalls.

As a consequence, the end-June 2015 program target on net domestic financing was not met. On the structural side, structural reforms in the financial sector were carried out as planned.

“The mission reached understandings on measures to bring the ECF-supported program back on track.

“Restoring macroeconomic stability by bringing inflation down to single digits, remains the key precondition to fostering and sustaining growth in the near- to medium-term. To this end, tight monetary and fiscal policies are needed. Given ongoing external financing shortfalls, the budget should be financed in a sustainable manner and expenditures prioritized with a view to safeguard social spending. Planned reforms to the farm input subsidy program aimed at increasing expenditure efficiencies are a welcome step.

“Strengthening public financial management systems is integral to safeguarding public resources and restoring confidence in budgetary processes,” stamps the statement. 

As part of the measure to boast the economy, Addressing existing infrastructure bottlenecks is key to boosting potential growth and creating job opportunities. These include improving transportation infrastructure, electricity supply, the business environment, and access to finance. The adoption of a strong debt management strategy will ensure that public debt remains sustainable as key loans are contracted for strategic projects in this area.

 

Related Posts

Leave a reply

Your email address will not be published. Required fields are marked *

  • Saulos Chilima: A masqueraded Messiah or a devil not yet known?

    Frank Kamanga Historically, in the kingdom of the blind, the one-eyed is king. This is probably why -and it is a worldwide phenomenon- desperate peoples around the globe are hanging by the slenderest of threads, putting their hope and trust in figures that either present themselves, or are being portrayed as modern-age “Messiahs”, vowing to…

  • Mrs Mia inspires DPP senior officials

    In a leaked whatsapp conversation among DPP gurus the blue officials said they wish Mrs Abida Mia who has a hardworking spirit was in their team. The DPP officials which include; Ben Phiri, Ngeme Kalilani and Nicholas Dausi just to mention a few said Abida Mia is an insiration to all women in politics. One…

  • FLASH BACK: Kaliati and cadets strip Eastern Region Chief naked, dethrone him

    By Nyasa Times Published: June 6, 2011 Chief Mponda of Nsamala Village in Balaka district, who claim to have been paraded naked by Democratic Progressive Party DPP) Youth Cadets last month, has cried foul over the news that he has been stripped off his chieftaincy. Mponda was beaten up, rubbed down with buffalo beans (chitedze)…

  • DPP, UTM wrestle over corruption evidence

    Two of Malawi’s political parties; the United Transformation Party (UTM) and the Democratic Progressive Party (DPP) are pointing fingers at each other over corruption allegations. DPP’s Nicholas Dausi said that Chilima’s secrets will be revealed if he continues to talk ill about the DPP. “He has skeletons in his wardrobe, but he is busy talking…

  • Buleya Lule was electrocuted, assaulted

    Malawi’s Forensic Pathologist and Clinical Forensic Physician, Charles Dzamalala has released results of the medical investigation on the death of Buleya Lule, a suspect in the abduction of Dedza boy born with albinism. Buleya Lule died suddenly on Wednesday, 21st February 2019 while in Police custody after being arrested when he was being suspected to…

  • JB tells govt to speak out on Buleya

    The former President of the country, Joyce Banda has urged government to speak out on how a susppect who was accused of taking a role in the abduction of people living with albinism  died in Police custody. The former President said Malawians need answers on Buleyas death. “This man who died mysteriously in the hands…

css.php