Lagarde tells Malawi not to abandon reforms

Christine Lagarde, IMF chief,  has urged Malawi to maintain its course of economic reforms that have stocked inflation, pushed commodity prices up and made President Joyce Banda unpopular.

Banda, who took office about a year ago, has been trying to fix a sputtering economy implementing a currency devaluation called for by the IMF that caused prices to jump.

“There has been huge efforts undertaken by the Malawi government and the Malawi population and it is really important to stay on course,” said Lagarde, on a two day visit to Malawi that started on Friday.

The economy of aid-dependent had been teetering under former President Bingu wa Mutharika who picked fights with donors whose assistance traditionally accounted for 40 percent of the budget. The aid cut coincided with steady decline in sales of Malawi’s biggest cash crop, tobacco.
“My coming is to see how we are partnering with Malawi and to support economic reforms that are underway,” said Lagarde

Banda, who took office in April after Mutharika died of a heart attack, has restored aid flows and showed her commitment to prudent policies by giving herself a pay cut, selling  and putting her predecessor’s presidential jet up for sale.

The devaluation of the currency has however made her unpopular as commodity prices have soared, pushing inflation to 33.3 percent in December – far higher than the forecast of around 18 percent for calendar year 2012.

Civil society groups are split over staging national protests against the high standard of living on January 17.