Think tank overview.

In its latest overview of Malawi, the Economist Intelligence Unit (EIU) reported that the wholesale dismissal of the cabinet on 1 November (due to allegations of ministerial corruption) by President Bakili Muluzi, may be seen as a way of placating donors. The EIU said the Malawi Congress Party, the main opposition party, remains constrained by its internal feud, which will harm its performance in the local elections in November. Low tobacco revenue will hamper economic growth this year, but improved weather conditions in the following years should see real GDP growth pick up to around 4.2 percent in 2002, from 3.8 per cent in 2001. As revenue from agricultural exports increases over the forecast period, the trade deficit is forecast to decrease slightly, to US $296 million in 2002, from US $301 million in 2000. Policy will continue to be strongly influenced by the need to satisfy donors. Details of a programme involving loans from the IMF under the poverty reduction and growth facility will be announced shortly and are likely to follow the ten-point plan presented in March by the finance minister, Matthews Chikaonda (who has been reappointed to his old job). Policy prescriptions will include strengthening fiscal discipline, increasing accountability and accelerating liberalisation. The measures for accomplishing these will not be popular and will prove difficult to implement; significant slippage could jeopardise donor funding, the EIU alleged.