BLANTYRE (Reuters) - Malawi expects its gross domestic product to expand by 5% in 2019 and by 7% in 2020 as the return of rainfall after severe drought boosts agricultural production, Finance Minister Joseph Mwanamvekha said on Monday in an annual budget speech.
The small southern African nation’s economy is largely reliant on sales of tobacco, tea and sugarcane, and has seen growth slow in recent years due to an El Nino-induced drought, electricity shortages and political uncertainty.
Malawi’s economy grew 4% in 2018 and it had to activate a three-year $112 million loan facility from the International Monetary Fund to shore up its finances as drought and slowing foreign donor funding over government corruption began to bite.
Mwanamvekha, appointed in May by President Peter Mutharika after he narrowly retained power, said the government was battling to curb the budget deficit and a rising government debt stock, which he said stood at 62% of GDP in December 2018.
The minister said Malawi was on track to remain within the terms of the IMF’s Extended Credit Facility (ECF) program. An IMF mission team arriving on September 10 for the second and third review will unlock the remainder of about $56 million of the loan, he added.
“External borrowing will be contracted with careful consideration to ensure realization of value for money,” Mwanamvekha said.
Reporting by Frank Phiri; Writing by Mfuneko Toyana; Editing by Chris Reese and Gareth Jones