Outgoing International Monetary Fund (IMF) Country Representative, Jack JooRee, has said Malawi should shift focus from unchecked expenditure to revenue mobilisation and keep investing in public infrastructure and human capital while fending off a debt spiral.
Ree’s tenure of office ends today and he will be heading to Washington, where he is expected to oversee operations of another African country.
He says fiscal prudence would help Malawi address some of the challenges it is facing, including unsustainable debt levels, spending beyond budget ceiling and lack of substantial investment towards sustainable development.
“Domestic debt has been growing at an unsustainably rapid speed over the last two years, mainly driven by two consecutive years of elevated budget deficits. Without a fix, this set-up can trigger a vicious circle where debt financing triggers more strained debt servicing capacity, and diminishing appetite by the lenders.
“Malawi just needs to stay the course of fiscal consolidation; in the medium term, we are projecting economic growth to rise to 6.5 percent which will depend critically on whether Malawi can lock in macro-economic stability therefore [sic] winning back investor confidence to unlock private sector growth potential,” Ree said.
Ree challenged the country to stay on course with reforms, particularly ones on economic governance and strengthen fiscal control to ward off Cashgate.
The IMF is projecting Malawi’s debt-to-GDP ratio to decrease by about 10 percentage points of GDP within the next seven to eight years, provided that the programmed path of fiscal consolidation is adhered to.
Ree described his tenure of office in Malawi as “pleasing”.