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Newly sworn-in President Bingu Mutharika said on Monday the country is not poor but needs to develop a new set of priorities that will stimulate economic growth and reduce poverty.
Mutharika, a holder of doctorate degree in economics, said in his inauguration speech in Blantyre that the measures to cure the ailing economy will include tight budgetary controls, a lean cabinet, reduction in travel and moving the presidency to Lilongwe where the capital city is.
Describing his five-year term of office up to 2009 as “an exciting period for Malawi which will see the country emerge from poverty to prosperity”, Mutharika said his administration will also rebuild confidence with the donor community to resume implementing economic programmes.
“To kick-start the economy, the country needs a formula to manage domestic debt and reduce interest rates. We also need sound economic governance to win the war against poverty,” he said against the background of government overspnding by K3 billion in the first six months of the current fiscal year ending June 30.
He also said prevailing interest rates of 35 percent are unsustainable and the exchange rate is unstable because of authorities’ inability to institute measures that would reduce public expenditure and manage domestic debt.
When former President Bakili Muluzi took over in 1994, the Malawi kwacha exchange rate to the US dollar was at K7 to the green back but stands at K109 to the US dollar today.
Inflation in 1994 stood at 98 percent but is currently at 11.1 percent after hitting the single digit late last year.
Mutharika, who has inherited a domestic debt of about K50 billion, has pledged to cut down on the travel budget.
This comes two weeks after economists said government spent K1 billion of the money meant for pro-poor activities on travelling.
Further to the domestic debt, Mutharika is taking the reigns of power at the time when countries belonging to the Common Approach for Budgetary Support (Cabs) are withhholding their budgetary support to Malawi because the IMF board did not meet on April 19, 2004 to review progress of the programme it has with the country.
Economists said the IMF board did not meet Malawi because the file for Malawi was incomplete.
Mutharika, former Economic Planning and Development Minister, is apparently aware of the challenges and said his first move will be to rebuild the confidence with the donor community to implement several economic programmes and projects.
He mentioned public sector reforms to achieve stable macro-economic environment, private sector reforms, agriculture sector reforms to ensure food security and civil service reforms to improve professionalism in civil service as his priorities.
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