Minister of Finance, Economic Planning and Development Joseph Mwanamvekha says his immediate task will be to sustain the stability of the economy while laying a strong foundation for high economic growth rates.
In an interview on Friday in Lilongwe after presenting the K511.3 billion four-month provisional budget, the minister said under his watch, he envisages lowering interest rates further while also ensuring the creation of jobs, mostly for the youth who are graduating from various colleges.
“Of course I am just five days old in office, but my immediate plan is to make sure that the economy is stable and also ensure high rates of economic growth for Malawi,” said Mwanamvekha, who once served as a Secretary to the Treasury (ST).
He assumes office at a time major macroeconomic indicators are showing mixed reactions.
Malawi’s gross domestic product (GDP) growth rate decelerated from four percent in 2017 to 3.5 percent in 2018 on account of a drop in agriculture output.
Development economists agree that a sustained six percent growth rate is ideal to have a meaningful dent on poverty reduction.
Headline inflation, which has been in single digits since August 2017 apart from November 2018 when it reached 10.1 percent, stands at 8.9 percent as of May 2019 on account of declining food inflation, according to the National Statistical Office (NSO).
On one hand, the kwacha has been depreciating in recent weeks, trading at around K815 to a dollar from K730 to a dollar a few months ago.
Interest rates have also fallen significantly in recent times following successive reductions in policy rates from 16 percent in January to 13.5 percent at the moment, creating room for cheap borrowing on the market.
Mwanamvekha said he is optimistic that the kwacha will be stable in the near future, forecasting an exchange rate of K750 to the dollar.
“Tobacco dollars will help us stabilise [the kwacha] and already $100 million [about K76 billion] has been realised from tobacco sales. The kwacha will soon remain stable,” said the minister.
A K750 to a dollar exchange equilibrium as envisaged by Mwanamvekha is one of the key underlying assumptions in the provisional budget.
Legislator for Lilongwe Msozi North Sosten Gwengwe, who is also Malawi Congress Party (MCP) spokesperson on finance in Parliament, said his party expects the minister to be clear on ways of reducing domestic and foreign debt.
“MCP also expects the new Finance Minister to crack down on monopolistic companies who bribe government officials to get government contracts,” he said.