Chakwera says Malawi showing signs of economic recovery
President Lazarus Chakwera says Malawi is a miracle because it is showing signs of recovery after facing several emergencies and disasters such as cyclones and disease outbreaks.
Chakwera was speaking in Nairobi, Kenya on Monday 29 April 2024 during the International Development Association {IDA} Heads of State Summit currently underway in that country.
He told African heads of State that one of the secrets to Malawi’s survival and recovery has been the World Bank’s IDA.
The Malawi leader has since described IDA as Malawi’s trusted and reliable ambulance in addressing the structural imbalances on the fiscal, current account, and monetary side occasioned by the shocks Malawi has encountered.
*True reflection about Malawi’s survival and recovery by statistics*
According to The World Bank report released in February 2024, Malawi has recently undertaken various macroeconomic stabilization measures, including adjusting the exchange rate, tightening monetary policy to combat inflationary pressures, implementing fiscal, external, and monetary reforms, as well as a series of structural changes. These actions are expected to address macroeconomic imbalances and contribute to stabilizing the economy, but a strong commitment to sustaining reforms is essential to facilitate economic recovery. This MEM’s Special Theme emphasizes the importance of prioritizing watershed management to bolster Malawi’s economy, including rehabilitating the country’s degraded watersheds, and suggests ways to enhance the involvement of the private sector.
In July 2023, Malawi’s economy continued to struggle amidst a devastating cyclone, rising inflation, and a protracted macro-fiscal crisis. The economy was weakened by foreign exchange shortages that constrained the importation of essential commodities and production inputs as well as a generally unfavorable external environment. The fiscal deficit remained high despite efforts towards fiscal consolidation. The MEM emphasized the restoration of macroeconomic stability, the support for growth recovery, and the protection of the poor from shocks. The Special Theme of the 17th MEM highlighted that Malawi’s rate of electricity access was among the lowest in the world, and enhancing electricity access was key for economic development and the achievement of Malawi 2063.
In December 2022, The combined effects of adverse weather, acute foreign exchange shortages, disruptions to electricity, and the high rate of inflation, meant Malawi continued to face an economic slowdown. This report showed the emerging impacts of the economic crisis where higher government spending continued to widen the fiscal deficit, exerting pressure on the government’s fiscal consolidation plans. Malawi’s public debt was in distress, though debt restructuring negotiations are expected to help ensure debt sustainability over the medium term.
In June 2022, The 15th Edition of the MEM underscored significant deterioration in the government’s finances, with the deficit reaching its highest level in over a decade. Malawi’s economic growth was expected to decline further due to these chronic imbalances, which were heightened by severe weather events. The Ukraine-Russia war added a new crisis to what was already a challenging economic climate, with rising prices for fuel, fertilizer and other commodities impacting foreign reserves and exerting pressure on inflation. While risks to the Malawian economy tilted to the downside, the government began implementing critical policy reforms that aimed to address macroeconomic imbalances and secure a recovery. In the context of these fiscal constraints, the Special Theme of the 15th MEM highlighted the importance of deepening fiscal decentralization, strengthening the intergovernmental fiscal transfer system, and delivering quality services that reach poor and vulnerable households.
