UN, UK tip Mw on growing economy
The United Nations (UN) and United Kingdom have reiterated the need for the country to find sustainable and affordable sources of financing beyond international aid as a step towards propelling economic growth.
This follows recent comments from local commentators that the economy should brace for tough times ahead following continued volatility of the local unit, increasing inflation and rise in prices of strategic commodities.
In a response to an emailed questionnaire, UN Resident Coordinator Maria Jose Torres said there is a great scope for public and private investment in economic diversification and enhanced competitiveness in the country.
“The private sector should seize the opportunity to lead and engage fully in green recovery efforts to create sustainable jobs in order to alleviate poverty, create wealth and fight against exclusion and reduce inequality,” she said.
She said the widening fiscal deficit, estimated at 8.8 percent of gross domestic product (GDP) in the 2021/2022 fiscal year, would require prudent fiscal consolidation and innovative development financing such as blended finance and leveraging the potential of Public-Private Partnerships.
Torres said the UN acknowledges efforts to implement an efficiency agenda and tackling corruption in the public sector as a way to control illicit financing flows and minimise wasteful spending.
UK Embassy Charge d’Affaires Fiona Ritchie said the government should reallocate resources to reduce fiscal burden and prioritise productive investments in the agriculture sector.
She said the Affordable Input Programme should be adjusted to support other crops than maize and modalities such as supporting irrigation and through targeting farmers who are most likely to benefit from the subsidy to improve allocative efficiency and reduce the fiscal burden.
“Poorest and least productive farmers should be supported through expanding the cost-effective, flexible cash transfer scheme. The government’s role is to create an enabling environment for private investment and job creation through listening and responding to firms’ concerns and through tackling binding constraints such as high-cost energy and transport, which cannot be addressed by individual firms but reduce Malawi’s export competitiveness,” Ritchie said.
Ministry of Finance spokesperson Williams Banda said while the country was facing myriad challenges, the situation was not unique to Malawi.
He said, as countries recover from the pandemic, supply of some strategic commodities will still lag behind demand, hence increased prices.
“Prices of most commodities are on the rise because supply is catching up with demand and once this is done, normalisation will take place.
“Volatility of the exchange rate is a serious concern to government and, emphasis during the current financial year is to increase the country’s exportation capacity through earnest implementation of the National Export Strategy,” Banda said.