afrol News, 29 November - Economic growth is picking up in Malawi and the new government of President Bingu wa Mutharika is pleasing foreign cooperation partners by reforming the economy and governance. The International Monetary Fund (IMF) today expressed its support for Malawi's economic policies.

A mission of the IMF was in the Malawian capital Lilongwe at the invitation of the government to oversee the latest economic developments. The mission met with Malawi's Minister of Finance, the Governor of the Reserve Bank of Malawi and private sector representatives, discussing "economic policies for the remainder of the current budget year."

- In general, the mission was encouraged by recent signs that Malawi's economy is strengthening, the IMF said in a statement today. "Preliminary information indicates that economic growth picked up in 2003-04. It is now estimated to be around 4¼ percent in 2004, in part because of a very large increase in tobacco production that is also contributing to a rise in foreign exchange earnings."

Average inflation in Malawi had remained in the 10-12 percent range this year, but it is projected to rise temporarily to 14½ percent around the end of the year "because of the impact of higher fuel and maize prices," the IMF concluded.

The Fund said it was pleased with recent economic and development programmed launched by Lilongwe authorities, although some were considered expensive. Key government initiatives include the targeted input program (TIP), the purchase of maize to alleviate an expected shortage and recent increases in civil service pay.

- While these initiatives are costly, the mission agrees that food security and a more efficient civil service pay structure are important government priorities, the IMF statement said. The increased civil servant wage bill is part of President Mutharika's broad-based programme to fight corruption.

Malawi authorities nonetheless had spent and borrowed less than foreseen so far this year, the Fund was told in Lilongwe. This had been achieved by rejecting requests for extra budgetary spending and the postponement of maize purchases into the October-December period.

The general reform efforts of the new Malawian government were also hailed by the IMF mission. The Reserve Bank of Malawi had been let increasing its level of reserves during the tobacco marketing season. Malawi authorities further had implemented "measures to improve financial management, particularly in the areas of budget monitoring and expenditure control."

- Going forward, the mission encouraged the authorities to continue the implementation of reforms in order to improve Malawi's growth prospects and social conditions, the IMF statement said. "The IMF remains committed to helping Malawi achieve macroeconomic stabilisation, sustainable growth, and poverty reduction," it added.

Malawi has dramatically improved its relations with the IMF, World Bank and foreign donor countries after this year's change of government. President Mutharika has launched programmes to bring Malawi's economic policies in line with those of the IMF and to fight corruption. His fierce anti-corruption campaign has brought him in conflict with ex-President Bakhili Muluzi, who is still leader of the ruling UDF party.

By staff writer

© afrol News

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