By Frank Phiri
BLANTYRE (Reuters) -Malawi’s government trimmed its economic growth forecast for this year in its annual budget on Friday as disgruntled citizens protested in major cities over rising prices.
The protesters are mostly street vendors who accuse the government of failing to control double-digit inflation, which they say is putting them out of business.
As their demonstrations have spread from the capital Lilongwe to the main commercial city Blantyre, they have been joined on the streets by jobless youths unhappy with President Lazarus Chakwera’s government.
Finance Minister Simplex Chithyola Banda said in his budget speech that the donor-dependent Southern African country’s economy was expected to grow 3.2% in 2025, down from a forecast of 4.0% given in December.
Last year’s growth was estimated at 1.8% because of the impact of a severe regional drought that dented agricultural output, the mainstay of the economy.
Inflation was at 28.5% year on year in January, driven higher by crippling foreign exchange shortages that have curbed imports of key goods like fuel and fertiliser and led to a thriving black market for foreign currency.
Banda said the government hoped to address the forex shortages by boosting production in sectors that could bring in dollars, like agriculture, tourism and mining.
He said a national anti-crime unit would be set up to crack down on the parallel market for foreign currency.
The current fiscal year’s budget deficit is estimated at 9.6% of gross domestic product (GDP), while next year’s is seen at 9.5% of GDP.
Public debt stood at roughly 86% of GDP in September 2024, and the government is continuing to try to bring debt-restructuring negotiations to a close.
“Government in principle has reached agreements with all official bilateral creditors and is still negotiating with commercial creditors to restructure debt,” Banda said.
“Once the negotiations are completed, the initiative will ease the pressure on foreign exchange and provide fiscal space necessary for productive investment.”
($1 = 1,717.0200 kwacha)
(Reporting by Frank Phiri; additional reporting by Bhargav Acharya and Sfundo Parakozov; editing by Alexander Winning and Mark Heinrich)
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