The IMF mission to Malawi on Tuesday said the country’s recent economic performance has been favourable but the country can do much better if Capital Hill improves on reducing both public debt and budget deficits.
The fund has also asked government to enhance spending on infrastructure, health and education sectors as well as on social services, going forward.
Speaking at a news conference in Lilongwe at the end of its week-long mission, International Monetary Fund (IMF) mission chief for Malawi Pritha Mitra said the fund was pleased that real gross domestic product (GDP) growth rate for the country this year will rebound to 4.5 percent, buoyed by strong performance in the agriculture sector, coupled with reconstruction of infrastructure that was damaged by Cyclone Idai, especially in the Southern Region earlier during the year.
“Performance under the ECF [Extended Credit Facility] programme has been good. All but one of the quantitative performance criteria [QPC] for end-June were met. The target on the primary balance, which is fiscal balance that excludes interest payments, was missed largely due to shortfalls in tax revenues, unexpected goods and services spending to hold elections and to support post-cyclone disaster relief, and increased domestic development spending ” she said.
Mitra also said the fund projects that Malawi’s real GDP growth rate between 6 and 7 percent in the medium to long-term, backed by greater access to finance, crop diversification, an improved business climate, and more resilient infrastructure, including improved electricity generation.
Such a projection augurs well with Capital Hill which has also projected an economic growth rate of 7 percent next year, according to last week’s budget statement presented by Finance Minister Joseph Mwanamvekha.
Mitra also said IMF expects that inflation will reduce to 5 percent in the medium term.
On his part, Mwanamvekha said government was committed to the $112.3 million (about K83 billion) ECF programme, assuring the IMF Malawi will ensure that all the agreed benchmarks with the fund are met. The IMF mission team, led by Mitra, visited Lilongwe from September 10-17 2019 to conduct discussions on the combined second and third reviews of the three-year arrangement for Malawi under the ECF.