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8/12/2019 Malawi Economic Recovery Plan Edited 6th September 2012
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Malawi Economic Recovery Plan
Presented by Minister of EconomicPlanning and Development
8/12/2019 Malawi Economic Recovery Plan Edited 6th September 2012
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Outline
PART A
Background
The Recovery Plan Immediate Policy Reforms
Short Term
Medium Term ReformsPART B
Implementation arrangement
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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)
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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
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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PART B
Implementation Arrangement
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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
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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
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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
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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
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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
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Thank you