Reserve Bank of Malawi (RBM) Governor Charles Chuka says political will and patience on the part of the masses will be key to Malawi’s economic recovery efforts.
He was speaking in Blantyre on Friday during a business dinner organised by the Economics Association of Malawi (Ecama) under the theme ‘The Role of Economic Players in Economic Recovery’.
“The key to successful economic recovery will be the political will to implement the 2012/13 national budget as passed and, of course, patience on the part of the man on the streets,” said Chuka.
He said Malawi was currently going through a period of “correction” before growth becomes the focus.
“Hopefully by this time next year, this economy will be different and the debate by economists will have changed,” he added.
He expressed confidence that the Malawi kwacha will eventually stabilise, forex reserves will be built up, interest rates will begin to come down and that investors will start talking about Malawi.
Chuka said inflation should be contained within the 18.5 percent average for the year before coming down slightly to about 16 percent in 2013.
He also indicated that growth will pick up as projected and payment arrears will be reduced.
“We will forget that fuel used to be scarce. With increased reserves, we will open up trade, more so that Malawians can now enjoy the economic freedom enshrined in our constitution.
“I can foresee increased investment in both exports and import substitution industries in the country. That’s what a free float supported by appropriate monetary policy and fiscal policies brings about in a country like Malawi,” said Chuka.
While appreciating the pain recent policy decisions have brought on the local man and industry, Chuka said if RBM had a choice, they would have left the kwacha and interest rates alone as has been the case in the past.
“However, the extent of economic malaise was unprecedented in our short history in this country and it will take a lot more work and sacrifices before things get better,” said Chuka.
He praised Ecama for providing a platform where economists can bang heads and map the way forward, especially during turbulent times like the present when the economy is sailing through stormy waters.
Ecama President Edward Chilima said the association’s wish is to be pro-active rather than reactive, saying the dinner was a good example of the association’s way of doing things where it provokes economic debate through well researched papers on economic issues in the country.
“The current situation is where a journalist provokes a question and then Ecama jumps around to find some befitting response. We want this reversed,” said Chilima.
Ecama trustee Hitesh Anadkat proposed the need for the private sector to adequately fund Ecama, unlike the current situation where Ecama relies on financial support from RBM and has RBM governor as chairman for its trustees.
This situation, according to Anadkat, will make Ecama independent.
“The last thing we can do as Ecama is to continue relying on the Reserve Bank for financial support. If there is one area in the economy that needs analysis, criticism and comments, then it is the monetary policy. Which is why Ecama needs to be independent,” said Anadkat.