malawi economic recovery plan edited 6th september 2012

8/12/2019 Malawi Economic Recovery Plan Edited 6th September 2012

1/22

Malawi Economic Recovery Plan

Presented by Minister of EconomicPlanning and Development


2/22

Outline

PART A

Background

The Recovery Plan Immediate Policy Reforms

Short Term

Medium Term ReformsPART B

Implementation arrangement


3/22

Background

MGDS overarching medium term Strategy for Malawi(2011-2016)

Macroeconomic indicators not favourable during first

Year of its implementation Slowdown in GDP Growth compounded by forex and

fuel shortages

Cabinet directed to develop Economic Recovery Planfor quick economic gains

Economic recovery Plan Enriched by the NationalDialogue on the Economy (29th June-1st July, 2012)


4/22

THE RECOVERY PLAN

Proposes: Immediate policy reforms (within 3 months);

Short term policy reforms (within 1 year); and

Medium term policy reforms (2-5 years).

Also proposes increasing resource allocation toareas that would produce quick gains and toareas that address constraints to economicGrowth


5/22

Immediate Policy Reforms

Exchange rate Adjustment In May, 2012, Reserve Bank of Malawi (RBM) adjusted the Malawi

Kwacha exchange rate from an average of K167 to K250 to a dollar Malawi adopted floating exchange rate regime

Foreign exchange reserve cushion - Aims at ensuringthat exchange rate reforms are not economically and socially disruptiveand that sufficient foreign exchange is available to meet the countrysneed for strategic imports such as fuel, industrial raw materials andmedicine

Fuel Pricing To eliminate deficits in the Price Stabilization Fundand to reduce pressure on the budget, Government returned to

Automatic Fuel Pricing Mechanism Monetary Policy - To ensure less expansionary policy,

Government institutionalised monetary policy aimed at forestering pricestability, including the mopping up of excess liquidity by, among othermeans, adjusting interest rates


6/22

SHORT & MEDIUM TERM

Social Support Package - To mitigate unintendednegative socio-economic impacts of reforms on the population

Upscalling of Labour Intensive Public Works Programme

Upscalling of School Feeding Programme

Implementing Social Cash Transfer Programme

Upscalling Farm Input Subsidy Programme (FISP) Continuing School Meals Programme

Fiscal Policy Aimed at prioritizing expenditures to sectors thatwould enhance economic growth, create employment and boost production &diversification for export.

Medium term agenda is largely as outlinedin MGDS II


7/22

Rationale for Sectoral Choices in theRecovery Plan

Need to ensure rapid economic growth for povertyeradication

Focus on what is constraining growth i.e. Energy,Transport, & Forex shortage

The Plan therefore focuses on:

Energy

Tourism

Mining

Agriculture

Transport & Information Communication Technology


8/22

Energy Main objective is to generate and distribute sufficient

amounts of energy:

Top three Projects are: Kholombidzo Hydro power plant

Regional Power interconnection; and

Explore establishment of coal generated electricity.

Other critical activities include: Continue financing works at Kapichira II rehabilitation project;

Establish new hydro stations;

Continue pursuing the Millennium Challenge Compact with a view to widenits scope;

Manage the demand in the industry by encouraging economic usage ofelectricity, including usage of energy saver bulbs;

Enhance research in other sources of energy including wind and solar; and

Promote Public Private Partnerships (PPP) in energy generation and

distribution.


9/22

Tourism Aim is to develop Malawi into a major tourist

destination

Top three Projects are: Tourism marketing promotion and publicity;

Institutional Reform and Capacity Development; and

Development of Tourism Products in Malawi.

Other critical activities include: Restock game reserves and national parks and protecting animals;

Restore and improve tourism assets, including supporting therestocking of game parks;

Aggressively put measures to increase flights to Malawi, includingdirect flights from Europe;

Undertake a program to educate more trained staff, supervisors,and managers in the tourism sector; and

Improve tourism investment climate.


10/22

Mining Aim is to derive maximum potential by increasing production

and value addition Top three Projects are :

Updating the geological information system;

Support for small scale mineral production; and

Mining Projects (investments by private sector)

Other activities include:

Establishment of legal and institutional framework;

Ensure transparency in all mining contracts and close monitoring;

Enhance oil exploration and capacity building initiatives in the sub

sector;

Undertake a crash programme to train mining engineers, legalexperts in mining and other related fields in the sector; and

Promoting participation of local and foreign investors in the miningindustry.


11/22

Agriculture Objective is to diversify and focus on commercialization for export

market Top three Projects are :

Production of Legumes and pulses;

Promotion of production of wheat, paprika and spice; and

Presidential initiative on Small stock Production.

Other Critical activities include: Review the Strategic Crops Act as it disadvantages some crops and brings

distortions in the industry;

Production of rice;

Encourage large-scale commercial farming;

Adopt Integrated Production System (IPS) which will promote contractfarming;

Increase cage farming in fisheries to meet local demand for export market;Continue the Greenbelt Initiative with focus on irrigation farming of highvalue crops, aquaculture and animal farming; and

Increase and improve agricultural extension services.


12/22

Transport Infrastructure & ICT

TRANSPORT:Aimed at reducing transport costs and

improving efficiency to encourage trade andtourism

Rail Transport: Rehabilitate and expand the railway line and related

infrastructure; and

Create linkages to ports, industrial sites and regionaland international markets, focusing on those thatare linked to the priority crops and clusters.


13/22

Road Transport: Continuing to construct, rehabilitate, and upgrade road

infrastructure.;

Improving network of feeder roads, focusing

particularly on roads that support growth of selected

crops such as sugar cane, groundnuts soya and

sunflower for production, processing and export; and

Developing strategic corridors that are cost-effective for

international trade.

Transport Infrastructure & ICT


14/22

Transport Infrastructure & ICTContd...

Air Transport

Construction of an airport in Mangochi

Improving promoting and providing safe,

efficient, reliable aviation infrastructure andservices;

Promoting a competitive and efficient airtransport industry including by decisively solving

the problems of Air Malawi; and

Promoting PPPs to facilitate private investment.


15/22

Transport Infrastructure & ICTContd...

ICTAim is to improve usage and adoption of ICT services;

availability; geographical coverage & usage of modern

broadcasting technology and reducing communicationcosts

The following will be done:

Improving the regulatory framework for the sector;

Liberalizing the mobile telecommunications sector to encouragenew international entrants; and

Ensuring liberal regulatory environment regarding internationalICT gateway licenses.


16/22

PART B

Implementation Arrangement


17/22

Institutional and Governance Structure

CABINET COMMITTEE

ON THE ECONOMYAND PUBLIC SECTOR

REFORMS

OFFICE OF THE PRESIDENT ANDCABINET

(Overseer)

MINISTRY OF ECONOMICPLANNING AND DEVELOPMENT

(Coordinator)

RESERVE BANK OF MALAWI

(Monetary Policy)MINISTRY OF FINANCE

(Fiscal Policy)

MoGCSW MoESTMoICEMoTWCMoEMMoTPWMoAFS


18/22

Institutional Mandate

OPC to provide oversight and supervisory function

MoEPD will coordinate the implementation

MoF to provide resources to sectors for implementation

RBM to pursue prudent monetary Policy Line Ministries mentioned above to spearhead

implementation

Civil society and private sector to implement specific

activities & provide oversight accountability functions Donors and Cooperating partners to provide financial

and technical support


19/22

Implementation Framework

Focus Areas Objective Lead

Institution

Time frame Status

Exchange rate adjustment To move towards a market

determined Exchange Rate

RBM April-June, 2012 Done

Foreign Exchange Reserve

Cushion

Cushion Forex availability DP April-June, 2012 Partially done

Fuel Pricing Reduce Pressure on Budget FPC April-June, 2012 Done

Fiscal Policy To improve mobilisation of

and efficient utilisation of

resources

MoF April,2012-

March,2013

Partially done

Monetary Policy To anchor price dynamics in

order to maintain low and

stable inflation

RBM April,2012-

March,2013

On going

Sectoral Resource

Allocation

To prioritise expenditure to

sectors that would enhance

economic growth

MoF April,2012-

March,2013

On going


20/22

Implementation FrameworkContd

Mining To improve foreign exchange

earnings

MoEM April,2012-

December,2016

On going

Energy To generate and distribute

sufficient amount of energy to

meet national demand

MoEM April,2012-

December,2016

On going

Tourism To improve foreign exchange MoTC April,2012-

December,2016

On going

Agriculture To improve foreign exchange MoAFS April,2012-

December, 2016

On going

Social Support Mitigate unintended socio-

economic impacts of policyreforms

MoEPD,

MoEST,MGCSW

April,2012-

December, 2016

On going

Transport Infrastructure and

ICT

improving the movement of

goods and services, and the

sharing of information to

facilitate trade

MoTI,

MoICE,

OPC(E-govt)

April,2012-

December,2016

On going


21/22

Monitoring and Evaluation

Recovery plan will be subjected to quarterlyreviews

MoEPD will Monitor and Evaluate implementation

Information will be made available for decisionmaking

The Plan has assigned responsibilities and time

frames for implementers


22/22

Thank you

malawi economic recovery plan edited 6th september 2012

Documents