Malawi’s economic growth is being projected to rise by six to seven percent for the year 2019 with inflation hovering at eight percent, the IMF has said.
The figures were disclosed during a meeting between the IMF and the country’s finance minister at the second review of the Extended Credit Facility arrangement worth $112.3 million (about K8.4 billion)
The IMF mission for Malawi led by Pritha Mitra said the country’s economic outlook is favourable.
Mitra pointed out a rebound in agriculture and some improvement in electricity generation as factors that will influence the growth.
She said infrastructure projects such as electricity generation, crop diversification, greater access to finance and an improved business climate are all crucial in achieving the intended outcome.
“The authorities have an ambitious plan for infrastructure projects that aim to support sustainable growth and poverty reduction. In implementing these projects, it will be important to ensure that their financing preserves debt sustainability and contains fiscal risks.”
“Strengthening public investment management including through rigorous prioritisation of projects and an improved project management framework as well as oversight and monitoring of state owned enterprises and other parastatals will be critical to achieving this goal,” she said.
Despite the favourable outlook, Mitra warned that more efforts are needed to ensure fiscal sustainability.
The IMF team leader said there are key reform areas that need to improve such as debt management and public financial management, adding that undertaking regular bank reconciliations, improving commitment control and cash management and enhancing the transparency of the budget process and improving revenue administration.
She pointed out that the monetary policy continues to focus on maintaining single-digit inflation.
“The banking system’s resilience is improving as reflected in reduced non-performing loans and increased provisioning. Credit to the private sector has increased, but structural barriers, such as challenges in property rights, must be addressed to sustainability increase access to finance.”
“The newly adopted RBM Act has enhanced the RBM’s autonomy. As a next step, the RBM could continue gradually reducing its holdings of government securities.”
The discussions will continue at IMF’s Spring Meetings from April 12 to 14 in Washington, D.C. USA.