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Malawi’s economy has not collapsed, says Mutharika

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President Peter Mutharika on Monday told Malawians that the economy, sick as it is, has not collapsed and sounded optimistic that it would pick up by December.

Mutharika’s optimism comes barely a month before the International Monetary Fund (IMF) conducts a next review in December to determine if the country qualifies for the Extended Credit Facility, of which Malawi was declared off-track in the last review that was conducted in September, 2015.

Briefing the media at Sanjika Palace on the progress of the India-Africa Forum Summit (IAFS), Mutharika said the economy just went off-track due to a huge wage bill.

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“We faced some challenges but we will come on track in December when IMF returns to do the next review. The economy has not collapsed. We have never defaulted since independence and we will pick up,” said Mutharika.

He further justified the current economic crisis as a combination of factors which included high debts and a huge deficit that he inherited from his predecessor.

“We inherited K40 billion deficit when we came into government. This coupled with the high wage bill prompted us to borrow from banks. But I am pleased to tell the nation that the Minister of Finance is working on all these to bring our economy back on track,” said Mutharika.

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Commenting on the outcome of the IAFS, Mutharika disclosed that his government will provide security in terms of taxation and home protection to investors that are willing to come and do business in Malawi.

He assured the investors that his government will ensure that it participates in the regional and continental markets to ensure that there is a large market for the investors.

Minister of Foreign Affairs and International Corporation, George Chaponda, who represented the President at the summit, said he managed to put forward several requests for credit facilities to the government of India, one of which was the immediate release of the remaining USD23.5 million which originates from the previous Line of Credit that was pledged in 2010, to be utilised for the Blantyre Water Project.

Another achievement which looks more like burdening the already thin cow is the request that India grants the Malawi government another Line of Credit worth $400 million. According to Chaponda, $150 million has been earmarked for water projects; and $50 million will be used to enhance construction and capacity of community technical colleges.

However, both Mutharika and Chaponda did not disclose whether the government of India has given a nod to these requests but were quick to point out that the approval of the credit loans is a process that takes time.

The IAFS is the official platform for evolving negotiations and monitoring parameters of the African-Indian relations.

At this year’s summit, Malawi was represented by five ministers: Chaponda, Finance Minister Goodall Gondwe, Minister of Trade Joseph Mwanamvekha, Minister of Labour Henry Mussa and Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza.

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