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Malawi economy woes bother Goodall Gondwe

Malawi’s Finance, Economic Planning and Development Minister Goodall Gondwe has said the country’s economy is passing through ‘turbulent times’, citing a sharp fall in the kwacha against other major currencies, huge amount of domestic borrowing and uncertainty over the resumption of budget support.

In an interview in Lilongwe, Gondwe, however, sounded confident that the economy would shift to ‘normality’ as government is currently in constant engagement with development partners for a possible resumption of budget support and other technical support aimed at fixing the bruised economy.

Gondwe: Tanzania was in a situation like ours
Gondwe: Tanzania was in a situation like ours

“Nobody would say we have normal economic performance for a country with a huge amount of domestic borrowing, a country with a huge amount of arrears, that we inherited, of more than K100 billion, a country whose donors withdrew budget support.

What is important is to sit down and look at the problems we are in,” he said.

Gondwe blamed the mess on the looting of public funds at Capital Hill dubbed Cashgate, which he said had disturbed the path the economy had taken.

“I have strong confidence that we will resume to normality in the course of time and you will find that within a short period of time, we will resume single digit and high growth rates,” he said.

On the kwacha depreciation, Gondwe said Treasury in collaboration with the central bank “are doing their best to have a better passage of exchange rate by, among other things, ensuring the implementation of a tight monetary policy”.

He claimed that already, the kwacha has now began to show signs of stability and had stabilised at K520 and below as of Wednesday last week.

“Don’t forget that Tanzania was in a situation like ours. Our inflation is at 23.7 percent, but theirs was more than 100 percent. The depreciation of our currency is about 15 percent, but theirs was more than 100 percent within a short period of time.

“But Tanzania did the right thing with support of the IMF [International Monetary Fund] and now they have low inflation rate and are enjoying high growth rates,” said Gondwe.

Speaking separately, IMF mission chief to Malawi Oral Williams said despite persisting economic woes, the domestic economy has demonstrated strong signs of considerable resilience.

He said real gross domestic product (GDP) growth for 2014 is projected between five and six percent with contributions from the agriculture and retail trade sectors.

“However, inflation remains high, in part because of uncertainties about the resumption of budget support,” he said.

Williams also said last week’s discussion between the IMF mission team and government officials focused on the policies necessary to return the economy to non inflationary and inclusive growth trajectory.

 

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4 Comments

  1. Mr Gondwe, when are you going to fix the economy? I thought after 5 months in office you would be confident enough to say that you have fixed the economy? How much time do you need to fix it? Am really disappointed with this current DPP regime.

    Just as a reminder, few points from the DPP manifesto that attracted me to cast a vote for them.
    1- Total economic prudence & total economic independence from donors.
    2- Total national security.

    And below is how I have scored DPP on these two manifestos for the time they have been in power: The scores are from 0 to 10, with a score of 0 being the lowest.
    1- On Economy: Score = 0 – Why? Kwacha has tumbled beyond belief, Commodity prices sky rocketing, inflation is going up, unemployment up, civil service salary stagnation, civil service strikes on the rise……
    2 On Security: Score = 0 – Why? More Malawians have been robbed & murdered in the past 5 months that APM has been in power than those murdered during the two terms of Bingu Wa Muntaharika

    1. Mboga – You are such a generous man to give them a zero on economy and security. I would give the zero only if the retained status quo on these issues. To me, they are on negative 5. They are clueless. Even PP would have done a better job than them. Goodall is now crying for donor resumption and yet DPPs manifesto is without donors and many people voted for them because of this promise.

      1. I give both Mboga and Ine -10. You cannot fix the systemic rot of the past 50 years in 5 months. A Malawi kuzolowera brown envelope economics. You cannot band aid Malawi’s problems. Kuzolowera short termism eti?

        1. I totally agree with Brown Envelope. Malawians are quick to put pen to paper on punch the keyboard even if they do not understand the issues. This is not a DPP issue. It is unfortunately the true reflection of Malawi economy when you take out donor assistance. What we need to focus on is how we can grow our economy particularly developing our tourism industry. Instead of trying to score cheap political points here, let us Malawians hold hands together and contribute to how we can change our fortunes

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