30 December 2017

Malawi: Mutharika Says Malawi Economy Now Stable, Projects Growth of 6 Percent in 2018

Malawian President Peter Mutharika has put a positive spin on the economy saying it is falling into the stable category from the negative when he took over power in 2014, projecting growth of 6 percent in 2018.

Mutharika, who faces an election in May 2019, has said Malawi's economy is likely to grow 6 percent in 2018, mainly due to sound macroeconomic environment despite waning donor support..

He told Zodiak television that he inherited a gutted economy from the Joyce Banda administration but has now managed to boost the foreign reserves position to five months of import cover from one month that haunted his predecessor.

"When we came in we had only one month import cover. Now its five months the highest in the country," Mutharika stated.

The Malawi leader prides himself for making a lot of progress in stabilising the economy, saying the local currency, the kwacha, has remained relatively stable throughout the year.

"Kwacha has stabilised for over a year. The economy is beginning to grow now. It is clear that economy has now stabilised and its beginning to grow again," said Mutharika.

" You can see in terms of construction, there is construction everywhere which means that the economy is now vibrant and creating jobs for people both skilled and non skilled and also people who provide service are also able to take advantage," said Mutharika.

He said headline inflation is in single digits at 7.7 percent and falling.

Mutharika said the interest rates have gone down are policy rate now at 16 percent and on their way down to record levels and that the government has a strong import buffer, one of the largest in years.

The President said he expects in 2018 the economy will grow at 6 percent.

"We have managed to run the country for three years without budget support [from donors]," he pointed out.

"When we came in we find debts of over K550 billion - almost total budget. We have now reduced that to almost K150 billion," said Mutharika. "There are a lot of improvements taking place and we need the economy to grow more."

Chancellor College-based political and social analyst Ernest Thindwahas since noted that while the DPP administration has achieved macroeconomic stability in the past 12 months, lives of poor Malawians were not reflecting the positive change.

"This stability is mostly being enjoyed by the corporate world through the reduction of lending rates, but to the poor Malawian, life is still a struggle," Thindwa said as quoted in the press on Saturday.

Asked by Gospel Kazako during the television "conversation" how he intends to ensure the economic data will have trickle down effects to the people, President Mutharika said: " When inflation goes down it means prices stabilises, I can see there is no rise in prices."

He added: "People will begin to see the benefits, but you are right it does take time."

Mutharika said his government is launching projects that will create employment, citing the Chinese hotel projects he launched in Blantyre and Lilongwe.

But even as President Mutharika touts the stable economy during the year, critics argue that power crisis caused by reduced output from an installed capacity of around 350 megawatts to production of less than 200 megawatts, reversed most of the gains that should have been chalked up from the stabilising macroeconomic environment.

They argue that insufficient power could, therefore, be the country's biggest economic and social threat.

"Besides, the effects of the power blackouts on the economy will remain for years to come," said Thindwa.

Mutharika's administration was also dogged by several corruption scandals.

And Thindwa said: " We also expected government to decisively deal with corruption, but to the disappointment of many, those close to the ruling clique are being spared from prosecution."

Mutharika also faced accusations of nepotism. He denied those charges.


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