International Monetary Fund (IMF) Managing Director Christine Laggard on Saturday told Malawi to “stay the course” of the tough economic reforms if the southern African country has to get off the brink of economic collapse.
“If I have one message to leave as I would be going to Cote d’Ivoire tomorrow (Sunday) it is to stay the course, stay the course because there is no way back,” she told a press conference in the capital, Lilongwe, at the end of her two-day visit.
“The country has now done part of what was to be done; it has crossed more than half the river, if I may say, and the other side of the river is in sight and there is no way back.”
The former French Finance Minister, however, admitted that the economic reforms encouraged by the Bretton Woods institution, including the historic 49 per cent devaluation of the country’s currency, the kwacha, was biting the average Malawi hard.
The inflation rate is running at 33 per cent while interest rates are at an average 36 per cent thereby slashing the economic power of most Malawians.
“I know it’s hard, there are tough times particularly for the more vulnerable, the poor,” the IMF chief admitted. But, she added, “what is on the other side of the river is much more promising than what was on the previous side of the river.”
Lagarde said the West had embraced Malawi’s economic policies as evidenced by the increase of 50 per cent in total donations and an increase of over 100 per cent of grants to Malawi last year as compared to 2011.
“If that is not the sign that confidence has returned, at least, in the international community, I don’t know what will be more convincing,” she said.
Finance Minister Ken Lipenga agreed with Lagarde that the reforms were biting Malawians hard but said government had no choice.
“The decisions that President Joyce Banda took were very, very difficult decisions that any president can make any time but they were decisions that had to be made not because they were dictated by anyone outside this country but because that was the only thing to do for any sensible government faced by the challenges we faced,” he said.
Despite the difficulties the economy is facing, Malawi is set to grow by a projected 5.5 per cent in 2013.
And on a personal note, Lagarde, who became the first woman to head the world body after her compatriot, Dominique Strauss-Kahn, was embroiled in a sexual abuse scandal with a maid in a New York hotel, said she brought femininity to the IMF top post.
“I bring all my goodwill and every woman sensitivity to the job but there are tough decisions that have to be made,” she said, answering a question from PANA about whether her being a woman would bring drastic reforms to the body that was widely criticised for bringing hardship to many economies, especially in the developing world.
Before visiting Malawi, Lagarde was in Mauritius. She leaves Malawi on Sunday for Cote d’Ivoire and Mauritania.