The development experts estimate that economic growth in the region of 5 to 7 percent annually makes impact in reducing poverty in a country, as such achieving the projected growth means Malawi is well on the path to move its population out of the poverty.

The IMF statement issues at the end of 2018 Article IV consultations held from the 31st of January to 14th February 2018 indicates that the two sides have agreed to a new country programme that is expected to be approved in April 2018 when the IMF board meets.

Head of the delegation Pritha Mitra, Mission Chief for Malawi says, “The IMF team reached a staff-level agreement with the authorities of Malawi on a three-year program that could be supported by an arrangement under the Extended Credit Facility (ECF) and concluded the 2018 Article IV discussions. The economic program would aim to entrench macroeconomic stability and foster higher, more inclusive, and resilient growth.

“Malawi is recovering from two years of drought. Economic growth in the range of 3-5 percent is expected in 2018, followed by a rise to 6-7 percent over the medium term. Growth will be supported by enhanced infrastructure investment and social services as well as an improved business environment, which will boost confidence and unlock the economy's potential for higher, more broad-based, and resilient growth and employment. Inflation at end-2018 is expected to reach 9 percent before gradually converging to around 5 percent over the medium term.”-Kondwani Munthali

The team said it had agreed with Government officials to work out means of reducing budget deficit and enhancing transparency in the budget process, strengthening the medium-term budgetary framework and cash management, and routinizing bank reconciliation.

“While the Malawi Growth and Development Strategy (MGDS) III lays out ambitious goals for critical infrastructure projects, the government is committed to ensuring their financing preserves debt sustainability. Malawi’s debt has risen but its risk of debt distress remains “moderate”. To this end, investment planning will be critical – including rigorously prioritizing the pipeline of projects based, among other considerations, on credible cost-benefit analyses.

The IMF said the government will continue to improve the business environment, including easing procedures to start a business and deal with construction permits, strengthening contract enforcement, and enhancing the insolvency processes. It is also committed to implementing deep reforms including in agricultural regulations and market intervention systems, agricultural subsidies, and land management systems.

The team met with Minister of Finance Goodall Gondwe, Governor of the Reserve Bank of Malawi (RBM) Dalitso Kabambe, other senior government and RBM officials, a broad range of national stakeholders outside government, as well as representatives of Malawi’s development partners. The IMF team thanks the authorities for their warm hospitality, strong cooperation, and constructive discussions.
-Kondwani Munthali