Malawi government will revise the country’s economic growth projection for 2012 further downwards following poor tobacco revenue and the struggling manufacturing sector, Minister of Finance Ken Lipenga has confirmed.
The administration, however, expects the economy to bounce back in 2013 when economic growth is projected to reach 5.5 percent.
Speaking when he officially opened the Common Approach to Budget Support (Cabs) review meeting in Lilongwe on Tuesday, Lipenga said preliminary assessment shows that the economic performance will be slower than 4.3 percent as initially projected.
“This is largely due to a significant contraction in sectors namely agriculture, forestry, fishing and manufacturing which experienced negative growth,” said Lipenga.
He said the wholesale, retail and utilities sectors recorded growth albeit at a slower pace than expected.
“These are the sectors which drive the economy and whose accelerated growth is vital in boosting growth in subsequent sectors,” said Lipenga.
On budget performance, the minister said the total resource envelope for the quarter is expected to amount to K105.7 billion, of which K58.1 billion is domestic revenue and K46.9 billion is grants.
“We planned for a repayment target of K11.9 billion to the banking system. It now looks like we will repay more than this amount,” said Lipenga.
He said if government continues on the path of fiscal prudence that has been demonstrated in the first quarter, the fiscal policy stance will be upheld by the end of the fiscal year.
Commenting on the fuel situation, Lipenga said the shortages of fuel have resurfaced because of “logistical challenges” and a dispute with local suppliers on the profit margin and not as a result of foreign exchange problems as being suggested by other quarters.
“I don’t have full information as regards the situation but I’ve been told that it is not about forex,” said the Minister.