News24

World Bank offers Malawi turnaround plan

2012-03-08 15:39

Blantyre - The World Bank said on Thursday it had offered Malawi a plan to help turn around the troubled economy of the southern African nation.

"We have presented a comprehensive package with all necessary measures to help the Malawi economy," Marcelo Giugale, leader of a Bank delegation, told reporters in the main city Blantyre.

Giugale, the Bank's Africa director for economic management, said the country needed a "new strategy as soon as possible" after a five-year comprehensive country assistance strategy expired last year.

Stronger economic growth would help create jobs, he said, but to achieve that Malawi needed "large investments that would also assist in making Malawi a net exporter not only to African markets but also to overseas markets.

"This would mean real growth," he said.

He made no mention of earlier calls for Malawi to devalue its kwacha currency by 40%. The International Monetary Fund says the official exchange rate of 165 kwacha to one US dollar is hugely overvalued compared to the black market rate of 300 to one.

President Bingu wa Mutharika has angrily rejected that proposal, arguing that a weaker exchange rate would hurt the poor. On Monday he accused the IMF of being "just ignorant, undermining what a black man can do".

But on Thursday Finance Minister Ken Lipenga told reporters his delegation was "impressed" with the World Bank presentation.

The government would "consider the issues and present them with our own strategy," he added.

Comprehensive package

Mutharika invited the World Bank team to help Malawi with a comprehensive package that would look at all the challenges facing the impoverished nation, including serious shortages of foreign currency.

Several major donors cut their aid last year over concerns about the infringement of democratic freedoms, economic management and governance.

Malawi has adopted a zero-deficit budget that seeks to use local resources to replace the lost aid money.

But the lost aid has deepened foreign currency shortages, leaving the country without enough money for essential imports such as fuel.

The IMF said last year its programme with the country was "off-track" after the government failed to review a $79.4m credit facility designed to cushion the foreign exchange shortages.

Malawi's agriculture-powered economy grew by 6.7% in 2010, but not enough to create jobs and boost the economy in one of the world's poorest countries.