A 15 percent cut in fuel prices will boost Malawi's economy, while lower international oil prices will ease pressure on the import bill, Finance Minister Goodall Gondwe said on Friday. The government in the southern African country says it will struggle to reach its economic growth projections due to lower demand for its commodity exports as a result of the prevailing global economic meltdown.
Malawi this week reduced the price of fuel in a move that should breath some life into the economy, with diesel now costing around 199.30 Malawi kwacha ($1.42) a litre while the petrol price has fallen to around $1.52. "There will be so many benefits associated with this move.
In fact, quite considerably we will see an improvement in the general economic performance of the country as a result of this," Gondwe told Reuters. Malawi's economy had been enjoying a modest boom, but was hit last year by food and fuel costs. Latest government data put economic expansion at about 7 percent in 2008, compared to 8 percent the previous year.
In December the International Monetary Fund announced the immediate disbursement of $51.4 million of a $77.1 million loan to help Malawi reduce the impact of high fuel and fertiliser costs. The southern African nation relies heavily on balance of payment support from donors which accounts for 80 percent of its development budget.