Country Report Malawi

Outlook for 2008-09

• The president, Bingu wa Mutharika, and his party, the Democratic Progressive Party (DPP), will be engaged in an intense struggle to hold on to power for the remainder of their term.
• The presidential and legislative elections scheduled for 2009 are expected to be very closely contested by the three main parties: the DPP, the United Democratic Front (UDF) and the Malawi Congress Party (MCP).
• Market-orientated reforms will continue to shape policy. However, the opposition will be reluctant to co-operate in passing legislation, including key reforms and annual budgets, when parliament reconvenes later in 2008.
• Relations with donors could become strained, as the government may struggle to meet IMF programme targets in the face of political opposition, and as economic policy takes a more populist turn ahead of the elections.
• Uranium exports will lift real GDP growth from 7% in 2008 to 8.3% in 2009 as production at the new mine nears peak capacity.
• Increased government spending and high energy and food prices will push average inflation from 7.9% in 2007 to 9% in 2008 and 9.5% in 2009.
• The current-account deficit is forecast to narrow from 13.7% of GDP in 2008 to 10.7% of GDP in 2009, in line with the anticipated strong growth of uranium exports.
• The president, Bingu wa Mutharika, and his party, the Democratic Progressive Party (DPP), will be engaged in an intense struggle to hold on to power for the remainder of their term.
• The presidential and legislative elections scheduled for 2009 are expected to be very closely contested by the three main parties: the DPP, the United Democratic Front (UDF) and the Malawi Congress Party (MCP).
• Market-orientated reforms will continue to shape policy. However, the opposition will be reluctant to co-operate in passing legislation, including key reforms and annual budgets, when parliament reconvenes later in 2008.
• Relations with donors could become strained, as the government may struggle to meet IMF programme targets in the face of political opposition, and as economic policy takes a more populist turn ahead of the elections.
• Uranium exports will lift real GDP growth from 7% in 2008 to 8.3% in 2009 as production at the new mine nears peak capacity.
• Increased government spending and high energy and food prices will push average inflation from 7.9% in 2007 to 9% in 2008 and 9.5% in 2009.
• The current-account deficit is forecast to narrow from 13.7% of GDP in 2008 to 10.7% of GDP in 2009, in line with the anticipated strong growth of uranium exports.

Monthly review

• The speaker of parliament has announced that the House will reconvene between April 28th and May 15th to commence budget discussions, after the president suspended parliament in September 2007.
• The Anti-Corruption Bureau has applied to the High Court for permission to interview the former president, Bakili Muluzi, on fresh corruption allegations, but there are suspicions that this move is politically motivated.
• Mr Muluzi has been elected by the UDF as the party's presidential candidate for the 2009 election. He has defeated Cassim Chilumpha, the vice-president, who mounted a last-minute challenge for the position.
• An IMF mission to Malawi has given a positive report of overall progress under the three-year poverty reduction and growth facility, which ends in August 2008, but the potential success of a follow-up programme is in doubt.
• There has been much confusion over the reopening of the annual tobacco auctions, as price volatility prompted their closure a number of times.
• A number of ambitious infrastructure projects have been put forward, but the country's ability to implement them is being hindered by capacity constraints.
• The speaker of parliament has announced that the House will reconvene between April 28th and May 15th to commence budget discussions, after the president suspended parliament in September 2007.
• The Anti-Corruption Bureau has applied to the High Court for permission to interview the former president, Bakili Muluzi, on fresh corruption allegations, but there are suspicions that this move is politically motivated.
• Mr Muluzi has been elected by the UDF as the party's presidential candidate for the 2009 election. He has defeated Cassim Chilumpha, the vice-president, who mounted a last-minute challenge for the position.
• An IMF mission to Malawi has given a positive report of overall progress under the three-year poverty reduction and growth facility, which ends in August 2008, but the potential success of a follow-up programme is in doubt.
• There has been much confusion over the reopening of the annual tobacco auctions, as price volatility prompted their closure a number of times.
• A number of ambitious infrastructure projects have been put forward, but the country's ability to implement them is being hindered by capacity constraints.

SOURCE: Country Report