Malawi sees first major protest under President Banda

BLANTYRE, Malawi Thu Jan 17, 2013 1:45pm GMT

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BLANTYRE, Malawi (Reuters) - Thousands of Malawians took to the streets on Thursday to protest against soaring inflation in the first major unrest under President Joyce Banda.

Police in riot gear stood watch near shuttered shops for a peaceful demonstration in the commercial centre of Blantyre and smaller rallies were held across the southern African country, where street protests are unusual.

Banda, who came to office in April 2012 after her predecessor Bingu wa Mutharika died of a heart attack, was welcomed with a groundswell of domestic and international support but has seen her popularity erode as the cost of living has jumped in the impoverished state.

"Money in the pocket is useless as it buys less. I came here to express my grievances and I hope the presidency notices," said Prince Chokotho, one of the protesters.

The marchers, mostly young, waved banners slamming Banda for not being assertive enough in addressing the country's economic problems and presented a seven-point petition to local authorities.

An economic analyst said Malawi was paying the cost of delays in implementing reforms such as increasing transparency in government finances and cutting red tape for investment.

"There will be no quick fixes, but any U-turn from staying the current course will be disastrous. What is needed is a credible and consistent policy," said Ben Kalua, head of the economics department at Chancellor College, part of the University of Malawi.

Banda has been trying to rebuild an economy sent into a tailspin by Mutharika, but prices have soared since she devalued the currency on the advice of the International Monetary Fund.

The economy of the aid-dependent country teetered under Mutharika, who picked fights with donors that led to a freeze in major assistance packages.

The cut in aid, which has traditionally accounted for 40 percent of the budget, coincided with a steady decline in sales of Malawi's biggest cash crop, tobacco.

Banda has restored aid flows, taken a personal pay cut and put her predecessor's presidential jet up for sale.

But soaring commodity prices pushed inflation to 33.3 percent in December - far higher than the forecast of around 18 percent for 2012.

Banda could see her reform plan hit snags when parliament convenes next month, with many members of her ruling coalition backing away from a leader who once garnered strong support.

IMF chief Christine Lagarde urged Banda to stay the course during a visit to Malawi last week.

(Additional reporting by Mabvuto Banda in Lilongwe; Editing by Jon Herskovitz and Andrew Roche)

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