Malawi’s government lowered its 2025 growth forecast to 3.2% amid protests against rising inflation. Citizens, particularly street vendors, blame the government for economic hardships resulting from a 28.5% inflation rate. Fiscal policies aim to boost production and restructure public debt to relieve pressure on foreign exchange, amidst a significant budget deficit.
Malawi’s government has revised its economic growth forecast for 2025 down to 3.2%, compared to an earlier estimate of 4.0%. This adjustment is revealed in the annual budget as protests arise in major cities against rising inflation, particularly affecting street vendors and unemployed youth. These groups accuse President Lazarus Chakwera’s administration of failing to mitigate steep inflation, currently at 28.5%.
The high inflation rate, driven by severe foreign exchange shortages, hinders key imports such as fuel and fertilizer, exacerbating the economic situation. Finance Minister Simplex Chithyola Banda indicated that last year’s growth was only 1.8% due to significant drought conditions affecting agricultural output, the principal driver of the economy.
To combat foreign exchange shortages, Banda stated that the government aims to boost production in agriculture, tourism, and mining sectors. He announced plans for a national anti-crime unit to tackle the black market for foreign currency. The current fiscal deficit is estimated at 9.6% of GDP, with projections for next year at 9.5%.
Public debt remains a significant concern, standing at approximately 86% of GDP in September 2024. The government is in discussions to restructure its debt with both official and commercial creditors. Banda noted, “Government in principle has reached agreements with all official bilateral creditors and is still negotiating with commercial creditors to restructure debt,” aiming for a stable fiscal environment.
Malawi’s economic outlook faces challenges, including rising inflation and a reduced growth forecast. Protests reflect widespread dissatisfaction among citizens impacted by economic hardships. The government’s focus on enhancing production and restructuring debt is critical for stabilizing the economy and addressing public grievances.
Original Source: www.straitstimes.com
