The World Bank has cautioned government and monetary authorities to pay attention to significant downside risks which relate primarily to Malawi’s continued vulnerability to external shocks, amplified by the risk of fiscal slippages.
In its Malawi Economic Monitor (MEM) paper titled Harnessing the Urban Economy, the bank suggests reforms to boost agricultural commercialisation saying this will help build medium-term resilience.
In the analysis, the bank says Malawi is expected to remain vulnerable to climate variability at least into the medium-term future.
Said the bank: “There is a risk that a La Niña effect could trigger localised flooding, which might place already strained disaster response mechanisms under further pressure. Similarly, despite encouraging efforts to achieve fiscal consolidation, past experience suggests that
The institution also cautions on the continued decline in the prospects of the tobacco sector, saying combined with slow diversification and higher crude oil prices would also put pressure on external balances.
In a written response to Business News, Civil Society Agriculture Network (CisaNet) national director Pamela Kuwali said while commercial farming could be the way to go there is need for authorities to create an enabling environment for farmers to make the transition.
“We need to facilitate the creation of new structured markets, promote agro value addition and processing, strengthen and harmonise agricultural market information systems. All these are outlined in the National Agriculture Policy, but again there is need for commitment in terms of resources to translate dream into reality,” She said.
But Minister of Finance, Economic Planning and Development Goodall Gondwe is upbeat that the strong fiscal and monetary policies, reinforced by the International Monetary Fund (IMF) supported programme, have sustained the recovery which is continuing into 2017 and is expected to continue to gather momentum in 2018.
He said: “This expected favourable environment, if sustained, will augur well for public and private sector capital investments and could provide the linchpin of a needed robust growth.”
However, Gondwe admitted that government has a lot to do regarding the systematic compliance by the fiscal system to the country’s financial rules and regulations.
He said in the event, the establishment of a fiscal structure that provides for systematic reconciliations between Government accounts and bank statements ought to be adopted forcibly and urgently.