IMF highlights problems in economy, calls for tighter monetary policy

The IMF on Tuesday urged authorities in Malawi to tighten monetary policy and curb government spending to combat sluggish growth and the prevalence of poverty, news reports said on Wednesday. An IMF summary of recent findings by the IMF’s executive directors was quoted as saying that the IMF also pledged financial support for a poverty reduction and growth strategy drafted by Malawi authorities. The IMF has called for growth of 3 percent this year, inflation pegged at 10 percent, a balanced budget in the fiscal year 2000-2001 and targeted increases in social spending. “Directors noted with concern that although Malawi’s economic performance had improved in the latter half of the 1990s, macroeconomic stability had proved elusive, growth had been inadequate and a large proportion of the population remains in poverty,” the summary was quoted as saying. The directors also called on planners to avoid subsidies on maize or petroleum and to channel social spending to the educational, health and nutritional needs of the poor. The IMF has described Malawi as a predominantly agricultural country, one of the poorest in the world, with most of the population of 11 million dependant on subsistence farming. Tobacco is the major export.