The World Bank says restoring Malawi’s economic growth will require difficult policy choices with clear targets and clear growth vision for the economy with higher income groups shouldering most of the choices.
Country Manager for Malawi World Bank Group Firas Raad made the remarks during the launch of the 22nd edition of the Malawi Economic Monitor (MEM) a biannual report which analyses economic and structural development issues in Malawi.
The MEM comes under the title “Getting reforms right” and a subtitle “Reversing Malawi’s export decline” with the first part of the publication providing a macro fiscal update while the second part focuses on a special topic.
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It comes at a defining moment as the new Peter Mutharika administration has initiated reforms to restore domestic debt, boost growth and create jobs.
Whilst acknowledging initiatives taken by government to restore macro-economic stability, the World Bank boss noted that the economic situation remains sobering and this requires action as noted in the presentations.
“We believe that continuing the reforms is essential; it’s not enough to do one two or three different reform initiatives, it should be part of an overall reform process that is sustained, well-sequenced, well communicated; so we’re looking forward to that happening .
“We also mentioned in the report that in addition to macro-economic stability, boosting the private sector, making sure that service delivery is provided to the citizenry and also investing in critical infrastructure”.
He stated that all these different initiatives are crucial to ensuring the economy recovers and it begins to grow at levels that are consistent with the economic 2063 vision of the country.
The Bank’s Country Manager stressed on the need for Malawi to export more products into more markets and staying in those markets.
“Exports promotion is central to economic recovery. Malawi has faced challenges in this area; we saw that the number of exports products have declined and you have less products going to less export markets and now reversing the trend is very important for the government and various stakeholders to try to achieve that in a period of time that is less than six months to a year”.
Raad indicated that the Bank brings in grant financing, technical assistance towards engaging in policy dialogue of various stakeholders but all this is aligned with a strategy towards ensuring that the government creates an ecosystem in which the private sector can thrive.
He cited macroeconomic stability, low inflation and low interests rates, a stable environment which the private sector can operate as some of the key elements worth noting adding all these require critical infrastructure, affordable and predictable energy supply.
Going forward, he spoke on the Bretton woods institution’s intention to designing the next Country Programme Framework with Malawi to enable it achieve macro-economic stability and ensure a vibrant private sector that creates jobs and improves living standards.
Finance, Economic Planning and Decentralization Minister Joseph Mwanamvekha described the title of the report as relevant to his Ministry and other players especially on the need to slow down on imports.
He observed that the economic monitor highlights the risks of climate related shocks, global uncertainty and emerging opportunities for a prosperous agricultural season.
Mwanamvekha underscored the importance of implementing reforms, careful sequencing of reforms that transcend political cycles and to measure progress and communicate results openly and maintain a fair and predictable operating environment.
He indicated that he wants to be part of the legacy of bringing the necessary changes through cost-cutting measures and that mid-year, there will be more to deal with the current high deficit, macroeconomic fundamentals and trade issues.
The Finance Minister admitted the negative impact the high inflation is having on people’s disposable incomes which he noted have been substantially reduced.
According to him, there is no better time for reforms than now and spoke on the government’s determination in pursuing the agenda.
“The time for theory is gone; we’ve done enough of that. We need to take action and we’re doing it now. Some measures will be painful but for a reason. We’ll take the stance not for bad intentions but for healing this economy.” he enthused.
Mwanamvekha hinted that the upcoming budget will advance reform agenda with realistic revenue projections and strengthen public investment management.