Malawi’s Economy to Expand 4.3% Through June, Minister Says

Malawi’s economy will probably expand 4.3 percent this fiscal year, with reduced farming production, power outages and a shortage of foreign currency the main risks to growth, Finance Minister Ken Lipenga said.

The expansion is forecast to accelerate to 5.7 percent next year, Lipenga said in a budget speech today in Lilongwe, the capital.

The southern African nation will record a budget deficit of 13.5 billion kwacha ($50 million) with total revenue, including grants, rising 20 percent to 394.5 billion kwacha in the year through June 2013, he said.

The deficit will be entirely financed from foreign grants and loans, “reflecting our main fiscal anchor of no net domestic financing,” Lipenga said.

He also announced the removal of price controls and subsidies on fuel and utilities. “This is an austerity budget and some of the reforms implemented will be painful, but these are required to put the economy onto a path of sustainable growth,” Lipenga said.

To contact the reporter on this story: Frank Jomo in Blantyre at fjomo@bloomberg.net

To contact the editor responsible for this story: Gordon Bell at gbell16@bloomberg.net