{
  "title": "\"Malawi—Economic Rebirth, Renewed Partnerships\", By Christine Lagarde, Managing Director, International Monetary Fund",
  "publication": "IMF News, January 5, 2013",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp010513",
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  "summary": "Global recovery expected to continue next year but \"remains weak and subject to great uncertainty\"; \"global activity seems stuck in low gear.\"",
  "authors": [
    "Christine Lagarde"
  ],
  "publishDate": "2013-01-05",
  "sections": [
    {
      "heading": "Global and regional economic context",
      "content": "- Global recovery expected to continue next year but \"remains weak and subject to great uncertainty\"; \"global activity seems stuck in low gear.\"\n- Regional growth projections:\n  - \"growth of around 5¼ percent in Sub-Saharan Africa this coming year.\"\n  - \"the low-income countries…are growing even more strongly—at around 6 percent.\"\n- Transmission and risks:\n  - IMF research: \"a sustained global slowdown of 2 percentage points of GDP would reduce growth in sub-Saharan Africa by about 1¼ percentage points a year.\"\n  - Main external risks cited: \"continued uncertainty about prospects in Europe, the United States, and China.\"\n  - Food risk: rising global food price pressures concentrated in maize, soybeans, and wheat; \"drought and crop failure\" as ongoing dangers, exacerbated by climate change.\n- Regional resilience and structural trends:\n  - Since 2000: \"debt levels fell from over 100 percent to under 40 percent of GDP, foreign exchange reserves more than doubled, and inflation halved.\"\n  - Two-thirds of countries in the region were able to pursue expansionary policies during the crisis and \"increase real spending on health and education.\"\n  - Trade reorientation: \"nontraditional partners account for 50 percent of African imports and 60 percent of exports\"; China \"is now the region’s largest single trading partner.\"\n  - Intra-regional trade \"has also doubled since 1990.\"\n- Medium-term demographic potential: \"In less than 30 years, Africa will have a labor force of more than a billion people.\"\n- Four key challenges for Africa identified:\n  - \"Faster structural transformation—led by higher productivity in agriculture and greater competitiveness in manufacturing and services.\"\n  - \"More inclusive growth and job creation.\"\n  - \"Better management of natural resources.\"\n  - \"Stronger financial sectors.\""
    },
    {
      "heading": "A Malawian economic rebirth",
      "content": "- Structural vulnerabilities:\n  - \"Agriculture still accounts for 30 percent of GDP and tobacco still accounts for almost half of total export earnings.\"\n  - Result: Malawi is \"too vulnerable\" to weather, commodity markets, and poverty traps.\n- Recent crisis and policy response:\n  - Upon taking office, President Banda confronted \"a dire shortage of foreign exchange\" that caused shortages of fuel, capital inputs, and medicine; businesses laid off workers; government could not pay its bills.\n  - Policy measures taken:\n    - Currency \"devalued the currency by 50 percent\" and moved to \"a flexible, market-based exchange rate system.\"\n    - Removed restrictions on foreign exchange transactions by banks and foreign exchange bureaus.\n    - Increased petroleum prices and \"cut off subsidies by moving to an automatic adjustment mechanism.\"\n  - Effects: these reforms \"stopped the overvaluation and eased strains on foreign exchange\" and \"the economic wheels started spinning again.\"\n- Growth and agricultural setback:\n  - Weather-related decline: \"a slump in agriculture—from a weather-related decline in maize production and a halving of the tobacco crop brought about by lower planting during the period of overvaluation.\"\n  - Growth estimates:\n    - \"we halved our growth estimate for 2012 to about 2 percent.\"\n    - \"we expect a strong rebound to 5½ percent this year, assuming strong policy commitment and normal weather conditions.\"\n- Human crisis and social protection:\n  - Food insecurity: \"almost 2 million people—12 percent of the population—face food insecurity.\"\n  - Immediate actions: deploying the grain reserve, partnering with World Food Program, providing in-kind food assistance.\n  - Recommended scaling up: \"scale up public works and other social protection programs\" and \"strengthening implementation capacity.\"\n  - Macro priorities while addressing human needs: \"stabilize the exchange rate and reduce inflation through tight monetary policy and fiscal restraint.\"\n- Growth strategy and competitiveness:\n  - Government’s Economic Recovery Plan seen as \"lays the foundation for higher and better quality growth.\"\n  - Competitiveness and diversification priorities:\n    - Make it easier for private sector investment, innovation, and expansion.\n    - Boost investment and upgrade infrastructure, \"especially in electricity and transport.\"\n    - Current competitiveness benchmark: \"Malawi ranks poorly in the World Economic Forum’s Global Competitiveness Index—129th out of 144 countries.\"\n  - Inclusion measures:\n    - Develop robust social safety nets.\n    - \"Expand access to financial services.\"\n    - Invest in skills, training, and education.\n- Human development and MDG progress:\n  - Areas with good progress and on track for 2015 targets: \"reducing child mortality, combating deadly diseases like HIV/ AIDS and malaria, ensuring environmental sustainability, and strengthening global partnerships for development.\"\n  - Lagging areas needing urgent attention: \"eradication of extreme poverty, attaining universal primary education, promoting gender equality and empowering women, and improving maternal health.\""
    },
    {
      "heading": "Partnership between Malawi and the IMF",
      "content": "- Principles of partnership:\n  - Success requires \"cooperation and solidarity\" and \"country ownership\" of reform programs.\n  - Domestic social partnerships urged: \"business community, labor representatives, and civil society organizations.\"\n- How the IMF helps:\n  - Policy advice: \"provide the most honest, objective advice\" drawing on nearly 70 years of experience.\n  - Lending: cushion economic and social costs of crises and \"catalyze financial support, by providing a seal of approval on a country’s reform program.\"\n  - Focus on low-income members: put the Poverty Reduction and Growth Trust \"on a sustainable footing.\"\n    - Lending terms: \"we will keep charging zero interest on concessional loans through the end of 2014.\"\n- Evidence of IMF-supported program impacts:\n  - Internal study: \"low-income countries with Fund-supported programs score better on both growth and poverty reduction than their peers.\"\n  - Fiscal prioritization effects: \"Spending on health and education also rises faster in countries with IMF-supported programs than in developing countries as a whole—health spending by 1 percentage point, education spending by ¾ percentage points over five years.\"\n- IMF operational support in Malawi:\n  - Three-year Extended Credit Facility (agreed last July) aims to \"restore stability, boost growth, and scale up social protection.\"\n  - IMF technical assistance and capacity building areas in Malawi: \"revenue administration, public financial management, the framework for monetary policy, financial sector supervision, and macroeconomic statistics.\"\n- IMF institutional resources for Africa:\n  - \"four regional technical assistance centers, with a fifth coming on line in 2013, plus a regional training center.\"\n  - Hands-on assistance in priority areas like managing natural resource wealth.\n- Membership framing:\n  - IMF described as \"an economic club of 188 member countries\"; when IMF stands with Malawi it proxies \"the other 187 member countries standing with you.\""
    },
    {
      "heading": "Conclusion and call to action",
      "content": "- Vision and motivation:\n  - Quotation: \"Imagination is the beginning of creation. You imagine what you desire; you will what you imagine; and at last you create what you will\" (George Bernard Shaw).\n- Final exhortation:\n  - \"Let us join together and be co-creators of a new Malawi, a new Africa, a new world.\"\n  - Emphasis that \"the reform program is your program\" and \"the future of Malawi lies in your hands.\"\n\nStatement by Christine Lagarde, Managing Director, International Monetary Fund — Crossroads Hotel, Lilongwe, January 5, 2013 (As prepared for delivery).\n\n---\n\n Content in this bundle\n\n- 010513cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Malawi and the IMF\n- Speeches\n- Statement by IMF Managing Director Christine Lagarde at the Conclusion of A Visit to Malawi\n- Christine Lagarde\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp010513"
    }
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    "Authors: Christine Lagarde",
    "Published: January 5, 2013",
    "Global recovery expected to continue next year but \"remains weak and subject to great uncertainty\"; \"global activity seems stuck in low gear.\"",
    "Regional growth projections:",
    "Transmission and risks:",
    "Regional resilience and structural trends:",
    "Medium-term demographic potential: \"In less than 30 years, Africa will have a labor force of more than a billion people.\"",
    "Four key challenges for Africa identified:",
    "Structural vulnerabilities:",
    "Recent crisis and policy response:",
    "Growth and agricultural setback:",
    "Human crisis and social protection:",
    "Growth strategy and competitiveness:",
    "Human development and MDG progress:",
    "Principles of partnership:",
    "How the IMF helps:",
    "Evidence of IMF-supported program impacts:",
    "IMF operational support in Malawi:",
    "IMF institutional resources for Africa:",
    "Membership framing:",
    "Vision and motivation:",
    "Final exhortation:",
    "[010513cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/speeches/2013/010513cpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Malawi and the IMF](http://www.imf.org/external/country/MWI/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Statement by IMF Managing Director Christine Lagarde at the Conclusion of A Visit to Malawi](https://www.imf.org/external/np/sec/pr/2013/pr1302.htm)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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