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| Business |
| Maize estimates out next week |
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by
Ephraim Munthali, 03 February 2004
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16:18:06
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The Ministry of Agriculture, Irrigation and Food Security is next week expected to release preliminary crop estimates for this year.
The main focus is likely going to be on maize, the staple food crop, whose impact on government’s macroeconomic objectives is massive.
Director of Planning in the ministry Patrick Kabambe on Tuesday said the authorities are still analysing the first round of estimates.
But he said there are strong indications that total maize production will drop this year as compared to the previous year.
Last year, Malawi produced 1.9 million tonnes of maize but the 12 million population needed about 1.938 million tonnes.
Kabambe said the drop in production is due to erratic rains which also came late, especially in the Southern Region.
“For maize to produce well, timing is important. The rains came late and it is likely the rains will slow down early,” he said.
A maize shortage will obviously leave millions of people starving and push the inflation further up since the staple food would not be enough to dampen the pressure on food inflation.
About 65 percent of Malawi’s inflation is driven by the food index, 60 percent of which is maize controlled.
Last year, a bumper yield, plus free maize distributed to the poor pushed the average inflation down to 10 percent from 14.8 percent.
The country, however, failed to hit the five percent inflation by the end of December last year due to government overexpenditure.
Last month, the Standard Bank of South Africa said Malawi’s inflation, which for two months was in single digits last year will continue rising.
This puts to test Finance Minister Friday Jumbe’s inflation target of 7.5 percent he expected his 2003/2004 national budget to achieve by December this year.
“Government spending [in the run-up to elections will act as a source of inflation,” said Standard Bank, which also owns Stanbic (Malawi).
Already the budget is under pressure and Jumbe is expected to ask Parliament to allow him source a sum of money he has decided to keep a secret. Jumbe claims he may not ask for any money.
Despite a green light for aid resumption from the IMF last October, donors are still unwilling to pump their money into a country about to hold elections and with a history of lavish spending.
Government appetite for money is likely to remain high until after the May general elections, what with the anticipated food shortage.
This is expected to reactivate heavy domestic borrowing, a move that would balloon the budget deficit and lead to increase in money supply.
“This will be worse if donor funding is not forth coming. As money supply increases, inflation rate and interest rates will automatically be going up,” analysts from Continental Discount House (CDH) said. |
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