Malawi’s economy may be understated by as much as 40 percent, according to Finance Minister Goodall Gondwe.
“The methodology that we are using to calculate gross domestic product (GDP) has got to be looked at,” Gondwe, 78, said in an interview in Washington on Saturday. “I’m sure that once we review that, we’ll have a higher figure.”
Nigeria overhauled its GDP data in April, which increased the size of its economy by more than three-quarters, while Kenya’s GDP is now estimated to be 25.3 percent bigger after a similar exercise last month. Malawi’s economy is worth $3.71 billion (R40.99bn), according to World Bank estimates.
The nation’s economy would probably expand an average of 7.5 percent annually over the next five years, Gondwe said. The International Monetary Fund (IMF) is estimating growth of 5 percent to 6 percent this year.
“We are now about 6 percent, even with the problems that we have now,” he said. “We think that once we have ironed out and normalised the problems here, we should be able to come up to about 7.5 percent or more.”
The IMF and other donors froze aid to Malawi last year in the wake of reports that almost a third of state funds were being lost through corruption. Malawi relies on donor funds to finance about 40 percent of its budget.
While Malawi’s dependence on foreign aid had eased, the country needed to restore fiscal discipline to lure donors and investors, Gondwe said.
“We need a lot of money,” he said. “Probably we need close to about $100m or so, but more importantly we need a considerable amount of money for development projects.”
Gondwe, who was finance minister between 2004 and 2009, was appointed to his current position in June after Peter Mutharika was elected president in a contested election. The Malawian kwacha has lost 22.4 percent against the dollar since the start of 2013.
“We need to restore macro-economic stability,” he said. “Inflation should go down and the exchange rate should stabilise.”
Malawi is Africa’s top exporter of burley tobacco, a low- grade variety of the crop. Limbe Leaf Tobacco – a unit of US-based Universal, Alliance One International and Japan Tobacco are among buyers of the nation’s crop.