The World Bank has urged Malawi to sustain the macroeconomic stability and contain budget deficits to ensure the country catches up in growth with its peers in the region.
Figures from the Reserve Bank of Malawi (RBM) contained in the latest monthly economic review show that government budgetary operations recorded a deficit of K73.4 billion in the first quarter (July-September) of this fiscal year, a development economic commentators have attributed to unrealistic revenue projections.
But, according to the Bretton Wood institution’s three recent key economic publications; The Country Economic Memorandum (CEM), the Malawi Economic Monitor (MEM) and the Investment Climate Assessment (ICA), Malawi is steadily changing in terms of structure with limited evidence of diversification and stagnation in the capital stock.
Speaking at the launch of the reports in Lilongwe on Wednesday, World Bank country manager Greg Toulmin said having recently re-established macroeconomic stability, the country must sustain and deepen this stability which requires strong institutions and policies.
“Budgets should be designed to ensure that revenues and expenditures don’t bounce. Government should also ensure that the levels of borrowing are manageable and they do not crowd out the private sector,” he said.
However, the bank says the country continues to have a dysfunctional agricultural sector, has a tough business environment and continues to have an implementation problem which has resulted in inconsistencies in growth and has failed to significantly improve the socio-economic status for the majority of the population.
While there has been improvement in fiscal management, the reports note that non-concessional borrowing will escalate debt distress.
In his remarks, Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe said going forward, the country should invest in strategic areas that will unlock development in the critical areas necessary to attain sustainable economic growth.
“If we invest in the energy sector, we will unlock the potential in mining and manufacturing sector and with additional investments in transport and telecommunications.
“The reports suggest that we do intelligence and strategic investment in key areas that will unlock development in the critical areas and with the stability, the economy is on the verge of taking off,” he said.
But Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said the results of the reports are not new as the country has always known what to do to unlock the development potential but fails to do it. n