IMF chief praises Malawi reforms for economic recovery
IMF chief Christine Lagarde on Saturday praised Malawi's President
Joyce Banda for “bold” economic recovery reforms, saying the measures
will lead to a turn-around despite their unpopularity.
International Monetary Fund Managing Director Christine Lagarde
shakes hands with Malawi’s president Joyce Banda prior to a
Kamuzu Palace on January 4, 2012 in Lilongwe, at the beginning
three-day visit to Malawi. AFP
“Notwithstanding the current hardships, many of my interlocutors were
confident the ongoing reforms will turn the economy around, an optimism
that I share,” said Lagarde, wrapping up an official visit to Malawi.
During her trip, Lagarde has praised the reforms which she said had
restored stability after Banda inherited a serious crisis characterised
by foreign exchange shortages that crippled key imports such as fuel.
Banda has overseen the devaluation of the kwacha currency by 50
percent, the easing of foreign exchange restrictions, and the raising of
fuel prices and cutting of subsidies since taking office last April.
Criticised at home for floating the currency under pressure from the
International Monetary Fund, she has assured that “there will be no
“I welcome government efforts to address unforeseen challenges
through her continued commitment to economic reforms,” Lagarde, the
fund's managing director, said in a statement.
She said the country had already made “significant progress” in
addressing serious imbalances that were hampering economic growth just a
few months ago.
Lagarde said during meetings with Banda, she stressed the “need to
stay the course, while putting in place social protection programmes to
alleviate the impact of adjustment measures on the poorest households.”
She said Malawi's recent economic situation has been difficult, adding
that drought and lower than expected foreign exchange earnings had
“dampened growth and contributed to a spike in inflation in 2012.”
Earlier on Saturday Lagarde stressed the need for Malawi to diversify
its economy, saying a reliance on agriculture left the country and its
economic recovery vulnerable.
“Following these reforms, the economic wheels started spinning again.
But progress is threatened anew by a slump in agriculture,” she said,
with the sector accounting 30 percent of GDP and tobacco nearly half of
The fund has halved its 2012 growth forecast for the impoverished
nation to around two percent but predicts a rate of 5.5 percent this
Private sector investment must be made easier and poor infrastructure
in areas such as electricity and transport upgraded, she said, with
Malawi scoring 129 out of 144 countries in the World Economic Forum's
Global Competitiveness Index.
The IMF, one of the main backers of the country's reforms, gave
Malawi a three-year $157 million loan package in June after ties had
broken down amid a spree of global aid suspensions under president Bingu