The objective of the paper is to examine the sustainability of current account in Malawi. The study\r\nemploys econometric analysis and solvency approaches to complement each other. Results from both\r\napproaches confirm that Malawi�s current account deficits were excessive and unsustainable during the\r\nperiod of 1980 to 2010. Results from the econometric analysis reveal that for Malawi�s current account\r\nto move towards a sustainable path, particular attention should be paid to the following factors:\r\nexternal debt, terms of trade, openness, real exchange rate, net foreign assets and growth.\r\nFurthermore, the current account deficit was excessively above the norm, deviating by an average of\r\n5.0% during the study period. The solvency approach to current account sustainability further confirms\r\nthat the country was running an unsustainable current account deficit. Interestingly, even after the\r\nhighly indebted poor countries (HIPC) relief, the current account was still unsustainable. In this regard,\r\npolicies should ensure that the real exchange rate is not overvalued, growth is enhanced particularly in\r\nthe export sector and also ensure that external debt is sustainable. These will ensure sustainable\r\ncurrent account.
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