VENTURES AFRICA – Malawi has been urged to push on with economic reforms that have fueled inflation while eating away public support for the new leader of the impoverished southern African nation.
International Monetary Fund (IMF) chief Christine Lagarde admitted that there had been major efforts undertaken by the Malawi government and the Malawi population and it was really important to stay on course.
She was addressing a forum of business women on a two-day visit to Malawi that started on Friday.
Malawi President Joyce Banda, who took office about a year ago, has been trying to rebuild an economy sent into a tailspin by her predecessor, Bingu wa Mutharika.
But prices have soared since Banda devalued the currency on IMF advice.
According to Reuters, the economy of the aid-dependent country has been teetering under Mutharika, who picked fights with donors.
The cut in aid, which has traditionally accounted for 40 percent of the budget, coincided with a steady decline in sales of Malawi’s biggest cash crop, tobacco.
Banda assured Lagarde that Malawi will not abandon reforms.
“I know that people are hurting but we have to go through this for us to start doing better and move our people out of poverty,” Banda said.
Banda took office in April 2012 after Mutharika died of a heart attack. Banda has since restored aid flows, taken a personal pay cut and put her predecessor’s presidential jet up for sale.
But soaring commodity prices have made her unpopular, pushing inflation to 33.3 percent in December – far higher than the forecast of around 18 percent for calendar year 2012.
Banda’s reforms have been slowed by the kwacha currency’s persistent weakness and by troubles in implementing social reforms.