Malawi 2007 growth revised to 7.5 pct from 5.6 - IMF

The International Monetary Fund on Wednesday raised its forecast for Malawi's economic growth this year to 7.5 percent from 5.6, citing good performance in the transport, distribution and agriculture sectors.

IMF resident representative in Malawi Maitland McFarlan said sound economic policies and anticipated good rains were also among the reasons for the upward revision in gross domestic product (GDP) expansion.

"Malawi's economy remains strong, buoyed by sound policies, a good harvest and favourable external conditions," he told a press briefing.

He said inflation had slowed more quickly than expected, while most of the country's targets under a Poverty Reduction and Growth facility (PRGF) programme had been met.

On Tuesday Malawi's central bank Governor Victor Mbewe told Reuters in an interview that inflation should stay in single digits during 2007 after slowing to 7.2 percent year-on-year in August from 7.4 in July.

Mbewe warned, however, that higher oil prices posed the biggest threat to the target.

Finance Minister Goodall Gondwe, a former World Bank economist, told Reuters the government was happy with the latest revision.

"This evaluation is a true reflection of what is happening on the ground and a stable microeconomic environment," he said.

Gondwe said that since attaining debt relief, Malawi's external debt slid to 23 percent of GDP at the end of last year compared with 142 percent at the end of 2005.

The World Bank and the IMF cancelled $2.9 billion of Malawi's debt in September last year, but the country remains one of the world's poorest nations with annual per capita income of about $160, and continues to rely heavily on foreign aid.