Malawi to maintain growth above 7 pct in 2008-IMF

from the Guardian

By Frank Phiri
BLANTYRE, Malawi's real economic growth will remain above seven percent in 2008, boosted by high tobacco prices, aid inflows and fiscal discipline, the International Monetary Fund (IMF) forecast on Sunday.

In a statement released at the end of a final review of a so-called Poverty Reduction and Growth Facility (PRGF), the IMF said Malawi's economic performance had encouraged it to discuss a new programme for the southern African country.

"Helped by sound policies, including better management of public spending, another good harvest, high aid inflows and high tobacco prices, real GDP growth is estimated to have been almost eight percent in 2007," IMF resident representative Maitland McFarlan in a statement.

"And it is estimated to stay above seven percent in 2008."
Malawi's second consecutive surplus harvest of staple grain maize helped reduce inflation from 15 percent in June 2006 to eight percent in February 2008, although higher food and fuel prices are putting upward pressure on commodity prices.

Malawi's annual inflation quickened to 8 percent in February, from 7.7 percent in January, on the back of rising commodity prices, according to the National Statistical Office (NSO).

McFarlan said a new IMF programme under discussion with Malawi would aim to improve macroeconomic stability, sustain growth and ease poverty.

"The mission and authorities agreed that it will be important to further strengthen public financial and economic management and increase foreign exchange reserves to buttress Malawi's ability to withstand negative shocks that could otherwise derail growth and increase poverty," he said.

Discussions on a new programme have advanced and will be discussed by the IMF's executive board in Washington in June.

The head of the IMF mission, Andrew Berg, said inflation could be kept
under control.