The World Bank has tipped Malawi to work on reducing borrowing and improve the economy to better fight under-nutrition and stunting amid revelations that about US $ 597 million (K 440 billion) is lost annually due to child undernutrition.
The loss estimated by the World Bank in the latest edition of the Malawi Economic Monitor (MEM) is an equivalent to 3 percent of Malawi’s total wealth as measured by Gross Domestic Product (GDP).
“This will continue to lead to lower wages and lost economic output in the future,” reads part of the new edition of the World Bank’s MEM.
Speaking at the launch of the 10th edition of the MEM report on Thursday in Lilongwe, the World Bank’s Country Manager Greg Toulmin stressed the need for taming an appetite for borrowing, if meaningful strides are to be made in improving the country’s nutritional status.
The report is titled ‘Strengthening Human Capital through Nutrition’.
“If Government can better control domestic debt levels, it can move towards creating the conditions for the private sector to increase investment, which can drive growth and job creation,” the World Bank boss in Malawi stated.
Toulmin also stressed that delivering on the country’s potential requires sustainable fiscal deficits, that would enable Malawi to contain and reduce escalating domestic debt burden.
Chief Director in the Ministry of Health Beston Chisamile conceded that economic loss due to poor nutritional status is deplorable.
“The economic loss emanating from poor child nutrition is unacceptable and not good for developing countries like Malawi,” he added.
The just released MEM report notes that with Malawi’s economic growth recovering and with single digit inflation, the government has an opportunity to achieve fiscal deficits and reduce domestic debt.
“Public domestic debt increased to 32.6% of GDP in 2019, up from 28.4% in 2018. Improving fiscal discipline is therefore necessary to sustain macro stability and to reduce domestic debt, thereby also reducing pressure on interest rates,” said Toulmin.
He, however, stressed that achieving the budgeted deficit of 2.5% for 2019/20 financial year will be a challenge, due to optimistic revenue projections for the budget.
“It will call for carefully prioritizing expenditure over the fiscal year to avoid a sizeable fiscal deficit,” Toulmin noted.
The World Bank also tips government to embrace policies that could unlock the potential of the private sector in order to strengthen growth and diversification, and to create more productive jobs for Malawi’s rapidly growing population.
The Malawi Economic Monitor (MEM) provides a bi-annual analysis of economic and structural development issues in the country.