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Stanbic Africa last week warned that President Bingu wa Mutharika’s resignation from the United Democratic Front (UDF) could bring uncertainties in Malawi’s economy.
“In the short term, however, developments on the political front will inject uncertainties about the country’s longer term economic programme.”
“The President’s resignation from his political party [UDF] could slow legislative initiatives required as part of the economic programme,” said Stanbic in its annual economic report on Malawi.
Mutharika resigned from the party that sponsored him into office two weeks ago, citing revelations that his election was rigged and disagreements with former president and UDF national chairman Bakili Muluzi as the reason.
Mutharika is forming his own party—Democratic Progressive Party.
Although a number of senior UDF officials including Members of Parliament are following Mutharika, analysts do not think the President can manage to put in place a working majority in Parliament to pass crucial bills.
This view is compounded by the fact that the largest opposition and most powerful party in Parliament—Malawi Congress Party—has clearly indicated that it will not support Mutharika.
Meanwhile, Stanbic has said Malawi’s economic future still relies on government ability prove to donors that it is credible.
The bank said such a rating is crucial for the country to get aid support to ease the domestic debt and secure medium term funding for various programmes.
Stanbic’s analysis coincides with the arrival of International Monetary Fund staff team today that will assess Malawi’s midyear economic performance under the Staff Monitored Programme (SMP).
Both the Reserve Bank and leading local economic lobbyist and budget monitor— Malawi Economic Justice Network—say government is on track with the programme.
Treasury Secretary Milton Kutengule refused to blow his own trumpet last week but his boss, Finance Minister Goodall Gondwe, told Reuters that government has met targets agreed under the SMP.
Stanbic said government prudent spending—especially if donor funding becomes available—will be a key source of enhancing growth rates.
Last week, Stanbic Bank (Malawi) said the fate of putting the Malawi economy on track lies in establishing a solid, reliable and sustainable revenue base.
The local Stanbic said spreading the earnings base could blend well government’s efforts to rein in spending.
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