Malawi economy was in reverse gear—MCCCI
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) on Saturday emphasised the importance of macroeconomic stability and coherence in policy of formulation to the growth of businesses.
MCCCI president Matthews Chikankheni said this in Lilongwe where International Monetary Fund (IMF) managing director Christine Lagarde met the business community.
Chikankheni also pleaded with Lagarde, who was in the country for a three-day visit, to help Malawi achieve economic stability through its policy advice.
“Macroeconomic stability is very crucial…it is no secret that countries that have performed well have maintained economic stability which is a pre-requisite,” he said.
His statement comes at a time when the economy is reeling from high interest rates—that threatens to reduce private sector borrowing—high inflation rate currently hovering at 33.3 percent and a sharp depreciation of the kwacha which has induced imported inflation.
Chikankheni said in the recent past, the economy was in a “reverse gear” as characterised by chronic shortage of foreign exchange and intermittent supply of fuel and industrial inputs.
He also said Malawi witnessed volatility in real gross domestic product (GDP), high inflation rates and unsustainable debt levels that culminated into lack of private sector investment.
But Chikankheni sounded positive, saying the current economic reforms championed by the Joyce Banda administration have since started bearing fruits in form of relative availability of foreign cash and fuel in the country.
He said MCCCI is also aware that the reforms have unleashed a lot of pain on ordinary Malawians, especially low income earners.
“We support the current reform programme. This will give us the much-needed confidence,” he said.
Commenting on the importance of macroeconomic stability, Lagarde stressed that it is the foundation “upon which everything else is based.”
Said the former French finance minister: “There is a great Malawian proverb that says ‘one little arrow does not kill a serpent’. And indeed, President Banda and her team moved quickly, moved boldly and moved on many fronts. In short order, they managed to turn the situation around and restore stability.”
The IMF top boss cited the devaluation of the local currency by 49 percent and the move to a flexible, market-based exchange rate system as well as the removal of restrictions on foreign exchange transactions by banks and foreign exchange bureaus as necessary decisions by Malawi which she said “stopped the overvaluation and eased strains on foreign exchange.”
Lagarde said the increase in fuel prices will free resources for infrastructure and social spending.
“Malawi, with its vulnerability to swings of fortune, surely deserves our support. And because we believe strongly in the government’s reform programme, we will continue to support Malawi. As the country transitions to a stronger, less volatile, and more diversified economy, we will be with you,” she added.
