Country Report Malawi September 2009

Summary

The Democratic Progressive Party secured a parliamentary majority in the May 2009 elections, which should help to alleviate the political inertia that has crippled policymaking in the National Assembly since 2004.
International donors are expected to maintain their commitment to Malawi, although this could waver if the country's economic policy were to go off track.
The fiscal deficit is forecast to remain high at 3.8% of GDP in 2009 before narrowing to 3% of GDP in 2010, owing to curtailed expenditure and continued revenue growth.
The Reserve Bank of Malawi (the central bank) is expected to lower interest rates towards the end of 2009, as inflationary pressures ease further, and will continue on this path in 2010.
A bumper harvest and the expansion of uranium production will underpin GDP growth of 7.6% in 2009, before growth slips to 5.3% in 2010.
The kwacha is looking increasingly overvalued, which is unsustainable in the light of Malawi's low foreign-exchange reserves and high import demand, and is forecast to depreciate to MK159.2:US$1 in 2009 and MK195.4:US$1 in 2010.
The current-account deficit is expected to narrow to 7.4% in 2009 and 5.9% in 2010, given uranium exports and weaker import growth.

Over the past two months former president, Bakili Muluzi, has become the centre of renewed attentions of the Anti-Corruption Bureau (ACB).
The leader of the opposition Malawi Congress Party (MCP), John Tembo, is currently attempting to hang on to the party leadership following the MCP's poor showing in the May election.
The growing scarcity of foreign exchange is restricting private-sector activity and has again called into question the government's exchange-rate policy.
Foreign-exchange traders have been accused by the government of hording money and exchanging it on the black market at unfavourable rates.
The first exports from the new Kayelekera uranium mine in northern Malawi are expected to begin in September. The mine is owned by Australian mining firm, Paladin Energy.
New data from the World Bank's Global Development Finance 2009 showed that Malawi's external debt remained roughly stable in 2007, totalling US$870m compared with US$872.4m in 2006.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60
NAICS Code: 212;52