‘The 3.4% growth rate being projected in 2024-25 National Budget may suggest that Government is doubting itself on policy implementation’

Finance Minister Chithyola Banda at the Pre-budget consultative meeting 

* At an economy of US$13 billion what is being added is only US$0.4 billion at the target of 3.4% growth rate

* An economy of US$550 billion at 3.4% growth rate adds US$18.7 billion—Chief Economist Chifipa Mhango

By Duncan Mlanjira

Economic expert, Chifipa Mhango — who is Chief Economist for South Africa-based Don Consultancy Group — says the 3.4% growth rate being projected in 2024-25 National Budget may suggest that Malawi Government is doubting itself on policy implementation.

Mhango says if the size of the country’s economy is US$13 billion and target 3.4% growth rate, what is being added is only US$0.4 billion while an economy of US$550 billion at 3.4% growth rate adds US$18.7 billion.

“This simple arithmetic tells you that for smaller economies to catch up, the economic growth rate must be much higher. Therefore, the Pre-budget economic projection with growth rate of 3.4% by the Ministry of Finance needs to be more ambitious in approach to take Malawi out of poverty and current low global economic rating.

“If one observes all the new policy initiatives such as mega farms, value additions and growing its exports, among others, then surely the economy of Malawi can grow above 5%.

“However, a lower projected economic growth rate to a level of 3.4% may point to that Malawi Government is doubting itself on policy implementation.

“On a lighter note, I would also advise the Minister of Finance never to personalize Government business or matters with funny acronyms as there is no such a Government policy or document like SOSISA. That is a bit unprofessional on his part.”

Mhango’s remarks come after Finance Minister Simplex Chithyola Banda said at Pre-budget meetings with essential stakeholders this week that he expects the local economy to grow by 3.2% — 1.7 percentage points higher than the 1.5% growth recorded in 2023.

In Lilongwe, at the second of the three series of the meetings, the Minister attributed the anticipated improvement in GDP growth in 2024 to, among others, improvement in forex availability, investments in the agricultural sector and other measures to be implemented under the Recover, Develop and Protect (RDP) strategy.

In his speech in Blantyre, during the first of the meetings — Chithyola Banda alluded that the 2024-25 National Budget will be formulated with optimism and will focus on recovery and cushioning the economy from the effects of recent policy changes Government has implemented.

“The budget remains an important tool in fostering economic prosperity and eradicating poverty especially in times like these when the economy is experiencing various challenges,” he said.

“It is therefore important that we brainstormed together areas that the budget should focus on in order to promote economic growth and resilience.”

In terms of the preliminary budget processes, the Minister said Government has set out the macroeconomic framework that looks at the macroeconomic targets such as fiscal and monetary policy measures and the debt sustainability targets to be achieved by the end of the fiscal year.  

“This follows the agreement with the International Monetary Fund (IMF) on an extended credit facility (ECF) of up to US$174 million, to help restore macroeconomic stability.

“Therefore, the Government has committed, under the ECF arrangement, to implement structural reforms and prudent macroeconomic — fiscal, monetary, exchange rate — policies and debt restructuring.”

The essential stakeholders that he is consulting, whose final meeting is on Friday in Mzuzu include gurus in the business community, NGOs faith-based organizations and the academia where they are presenting their views and proposals on the 2024/25 National Budget.