Malawi - Current economic position and prospects

R ESTR I CTE D FIT COWY Report No. AE-5a I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ This report was prepared for use within the Bank and its affiliated organizations. | | They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE CURREN T ECONOM1IC POSITIO'N AND PROSPECTS OF MALAWI December 12, 1969 Eastern Africa Department  CURRENCY EQUIVALENT LE 1 U.S. $ 2,40 . f 1 million = U.S. $ 2,4oo,ooo U.S.i -1 =; .417 U.S. $ 1 million = E16,667  This report was prepared by a Mission whicb visited Malawi from June 22 to July 11, 1969. The Mission was composed of John A. Edelman (Chief), George Beier (Fiscal Economist), Dieter Elz (Commodity Economist) and Godwin Okurume (Economist).   rmA 1TVW r)V fl M7M MM( Page No. LIST CF TEXT TAELES BASIC DATA SUMMARY AN]D CONCLUSIONS ....... * .0... ............ . * i - iv Is INTRODUCTION ....................,.............. II. RECENT ECONOMIC PERFORMNCE.......... . .... * .... ..... 2 Production .., see...... .0........... ......................... . . 2 Price and ikeges0.................... ................ 4 Investment ...0..6. ...................................... Consumption and Sa.i n g s 7 Public Finance..............7.. . .. .... 7 Money and Credit.... 8 The Balance of Payments and External Debt... ..... III. DEVELOPMENT POLICIES, PROGRAMS AND PRC SPECTS ............. 1 Administrative Aspects of Development ..............,.. 11 Development Policies ......... ............. . ee.... 12 Population Policies 13 The Public Development Program..............0.......... .1 Private Investment Prospects ........ ................. 16 Export Prospects..................e.;e. 17 Prospects for Investment and GDP Growthb .. ....e. ..e 21 IV. THE FINANCIAL OUTLOOK ...... .. .................. & ... 23 A. The Financial Prosnects of the Public Sector ........ 2 The Current Budget Outlook... 2... ..4...ce** Gur-rent Expenditure ... *00000060............ ,. ...... 25 The Tax System ... ................... ce. .... 28 The revelopment Budget.. .. .. ......c.. 29 B. Monetary Management and Private Credit Needs......... 32 C. The External Financing Prob1em..o...... eo*****&0. 35 APPENDIX I - Statistical Tables APPENDIX II - Notes on Malawi's Export Prospects APPENDIX III - Notes on Malawi's Tax System APPENDIX IV - Notes on the Main Government Enterprises O. ria.Ld a wi.   LIST OF TEXT TABLES Page No. 1. Export Projections....... ......... ......,.. .... 20 2. Projected Orowth of GDP by Sectoro. ,................O 22 3. Projections of GNP and Expenditure .................. 23 4. Past and Projected Current Account Transactions of the Malawi Government ............ ...*.... . ..-. ........ ... 25a 5. Past and Projected Recurrent Expenditure of the Malawi Government ......... ...... . ., 26a 6. Development Expenditure and its Financing .......... 30 7. Past and Projected Financing of the Malawi Government Defi cit . a0aa ,e0000. 00. . . . 0 ,, , . 0 31a 8. Banking System Flow of Funds....,o...o........o.e.o 34 9. Financing Private Investment...v.........s.... m e n... 35 10. The Balance of Payments and its Financing........... . 36a I1. Illustrative Distribution of External Loan Dis- burs0emt.0**o*..*** 37   BASIC DATA pra Total, including lakes : 45,747 sq. miles Land area : 36,448 sq. miles Land suitable for cultivation : 20,491 sq. miles Population Mid-1966 Total in country : o,0o-2,nno Migrant labor working abroad 270,000 Non-African nonulation - '17 929 Estimated annual average growth rate 3 percent UJrban ncnu1,qti nn (as nar(enta g nf to+.al pop.) : 5 1955 1960 1966 1969 Density of population per square mile 77 90 111 122 Per square m.;1 of land sultable for nl+t