Anti-Bakili Muluzi / MALAWI POLITICS TODAY

Malawi cuts rates to 20%

13/11/2006 13:57

ilongwe - Malawi's central bank on Monday cut its bank lending rate by five percentage points to 20% because of lower inflation and an improving economy, a bank spokesperson said on Monday. "Inflation has been dropping tremendously this year," central bank spokesperson Mirriam Wemba said. "We can (now) forecast that by December next year, the (inflation) rate will drop to (around) eight and five percent," she added. The International Monetary Fund, which last month cancelled 90% of Malawi's debt burden of $2.9bn, wants to see inflation for 2006 reduced to single digits in the impoverished southern African nation. The National Statistical Office put year-on-year inflation at 12% in August. Financial analysts welcomed the central bank's decision, adding the reduction in rates was long overdue. "This will stir production and growth," said Sadwick Ntonakuntha, economist at Malawi's chamber of commerce.