The World Bank has asked Malawi to reduce deficits, over-borrowing and stop crowding out the private sector to sustain a recovery in economic growth.
This is according to the fifth Malawi Economic Monitor (MEM) report the bank released yesterday in Lilongwe.
The report recommends that Malawi should break out of a vicious cycle of the three factors, failing which the nation would continue to have trouble controlling inflation and lose out on high levels of investment and job creation.
It further emphasises the need for policy reforms at Capital Hill to reduce distortions and ensure that agriculture markets function more effectively in a bid to commercialise the sector which is largely characterised by a strong subsistence orientation.
It nevertheless projects a 4.4 percent Gross Domestic Product (GDP) growth in 2017 owing to bumper harvests expected this year.
The World Bank’s Senior Country Economist Richard Record stressed that further reduction of inflation and interest rates is key to growing Malawi’s economy in the short to medium term.
“We are projecting a growth of 4.4 percent this year and we saw recently inflation going down and interest rates being reduced, a thing we have been waiting for. We have seen recovery in agriculture and some good policies implemented by the government,” Record said.
Sharing his views during a panel discussion conducted after the release of the report, one of the panellists, Director of Research and Statistics at the Reserve Bank of Malawi MacDonald Mwale, pointed out that Malawi only needs political will to sustain economic growth.
“We need to ensure that we link government budgets to development programmes such as the Malawi Growth and Development Strategy and take action on the documents that have very good plans to turn around Malawi’s economic fortunes,” Mwale said.
The Malawi Economic Monitor is a report providing an analysis of the country’s economic situation and projections based on current statistics in various economic sectors.
The release of the report comes at a time various parliamentary committees are discussing the 2017/2018 financial plan before they deliver their findings in Parliament next week.
Minister of Finance Goodall Gondwe recently presented a K1.3 trillion budget with a projection of five to six percent growth of the economy and attainment of single digit inflation.
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