The International Monetary Fund (IMF) has said measures that President Peter Mutharika and his administration adopted soon after being sworn in as president are not working and will leave Malawi in desolate if not urgently revised.
The body, whose experts completed their 2-week mission yesterday, concluded that Malawi is currently flying through a serious economic turbulence because of weak fiscal measures. With this, the experts project the country’s GDP to steeply decline from 5.7 percent.
“The Malawian economy is facing difficult challenges… Real GDP growth is projected to fall to 3 percent in 2015 from 5.7 percent in 2014″, said the experts who singled out Peter Mutharika’s gratuitous spending as one reason for the current economic trajectory.
“Fiscal slippages equivalent to about 2 percent of GDP emerged during the second half of FY14/15, in part because of overspending on the wage bill, and these were exacerbated by revenue and external financing shortfalls. Corrective measures undertaken to offset the slippages were insufficient. As a consequence, the end-June 2015 program target on net domestic financing was not met”
To steer the economy to recovery, the IMF experts have called on Mutharika to put in place tight monetary and fiscal policies that would bring down inflation, stuck above 20 percent since mid-2012, a few month after the ushering in of Joyce Banda as president.
“Addressing existing infrastructure bottlenecks is key to boosting potential growth and creating job opportunities. These include improving transportation infrastructure, electricity supply, the business environment, and access to finance. The adoption of a strong debt management strategy will ensure that public debt remains sustainable as key loans are contracted for strategic projects in this area”.