IMF says country's economy improving

An International Monetary Fund (IMF) team has lauded Malawi for its control on public spending and tackling corruption and said that its economy was turning around. "There are now signs that the economy is improving - the domestic debt situation has eased and credit to the private sector has begun to expand. We now expect growth to rise to just under five percent in 2005, in part because of a strong expansion in private sector activity," said John Green, an advisor in the IMF's Africa department and leader of the team on Thursday. A five-member IMF team was in Malawi to review the country's progress on tightening fiscal discipline, and assess the new government's performance in terms of macroeconomic reform. The IMF suspended aid to Malawi during the tenure of the previous president, Bakili Muluzi, because of alleged corruption, poor governance and over-expenditure. Last year, Malawi requested the IMF to put it on a staff-monitored programme, which aims to address macro-economic imbalances by containing government borrowing and holding down inflation. Government spokesman Ken Lipenga noted that domestic borrowing had been contained at about US $4.4 million, against the projected amount of $5 million by December 2004, and the inflation rate stood at 12 percent between July and December against an IMF projection of 18 percent. An estimated 65 percent of the country's 12 million people live below the poverty line. President Bingu wa Mutharika has indicated that an economic growth rate of around six percent or more is required to alleviate poverty. But since taking office last year, the new government has managed a growth of 4.3 percent. The IMF team also expressed concerns over Malawi's food security situation after it noted that the country had experienced a dry spell during a critical stage of the maize growing season. "There are uncertainties related to the impact of recent dry spell on agricultural output and on the budget. The government and donors are working together to develop an appropriate food security policy," Green said.