LILONGWE, March 15 (Xinhua) -- The International Monetary Fund (IMF) sees the economic outlook for Malawi as favorable, projecting an encomic growth of about 5 percent for the country in 2019, a representative of the organization said Thursday.
Speaking at a press conference in Lilongwe, Pritha Mitra, IMF mission chief for Malawi, said the economic growth of Malawi is expected to be supported by a rebound in agriculture and some improvement in electricity generation.
The IMF mission had discussions with Malawi officials from March 5 on the second review of a three-year arrangement for Malawi in relation to a 112.3 million U.S. dollars Extended Credit Facility (ECF).
Mitra said in a statement that Malawi's performance under the program has been productive, with all but one of the quantitative performance criteria met at the end of December, though Malawi is advised to put more efforts in ensuring fiscal sustainability.
"The target on the primary balance (fiscal balance excluding interest payments) was missed largely due to front-loading of budgeted expenditures and increases in spending to hold elections," said the statement.
Mitra said Malawi's economic growth is expected to be around 5 percent in 2019, and could go up further to 6-7 percent over the medium term.
The IMF mission chief said this could be driven by infrastructure projects including electricity generation, crop diversification, greater access to finance, and an improved business climate.
"Inflation is expected to ease to around 8 percent at end 2019 and gradually converge to 5 percent over the medium term," she said.
"Monetary policy continues to focus on maintaining single-digit inflation: the banking system's resilience is improving as reflected in reduced non-performing loans and increased provisioning," it said.
The IMF said the newly adopted Reserve Bank of Malawi Act has enhanced the central bank's autonomy but as a next step, the IMF has tipped the bank to continue gradually reducing its holdings of government securities.
The IMF noted Malawi government's ambitious plan for infrastructure projects aims to support sustainable growth and poverty reduction. But IMF has advised Malawi to ensure that financing preserves debt sustainability and contains fiscal risks in implementing the projects. It said the country should strengthen public investment management.
The discussions between the IMF and Malawi government are scheduled to continue in the weeks ahead.
