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An absent president who increased forex reserves

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President Peter Mutharika clocked one year in office on Sunday and many would agree that the last 12 months have been a mixed bag of fortunes for the president and the country.

He started off on a difficult note following electoral squabbles that rocked the country’s May 2014 elections and inherited a country that was going through economic problems following the suspension of budget aid by donors over the 2013 cashgate scandal.

Nevertheless, the president immediately fulfilled one of his campaign promises of reducing the size of the cabinet to 20 from over 30 by the previous government. He also sharply scaled down on travels and rolled out the Public Sector Reforms Programme.

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However, effects of the economic problems started showing their ugly face as the country was soon to be rocked strikes by workers in the public service demanding salary hikes.

The major strike was that in the judiciary which resulted into the courts being closed for over a month at a time the justice system was expected to speed up prosecutions of cashgate and other cases.

The strikes became so widespread and prolonged and President Mutharika was accused by some quarters of failing to quell the protests and for not commenting on them.

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Mutharika’s reluctance or delays to intervene on some problems affecting the country has generally characterised his presidency. There is a general feeling that the president tends to distance himself from some key issues of public concern by keeping quite when he is expected to say something about them.

No wonder, he has been described as an “absent” or “sleeping” president by some commentators.

The situation was made worse when it was revealed in the media that salaries of the president, ministers and members of Parliament had been secretly increased at the time civil servants were being asked to embrace austerity in the absence of budget aid.

Despite all the political and economic uncertainty in the country, Mutharika later last year defied odds and surprised even top economists when he creatively secured a debt swap facility with the PTA Bank which helped boosts foreign exchange reserves and led to the appreciation of the Malawi kwacha at the time the country was going through the lean period of the economy when exports slow down and agriculture in-put imports rise.

The appreciation of the kwacha combined with falling oil prices on the world market to lead into a reduction of pump prices of fuel in the country which, for example, saw a fall in the price of petrol from over K850 to about K696 per litre.

The development eased down inflationary pressures. Actually, the rate of inflation since then has been on a downward trend, falling from 24 percent at the time Mutharika became president last May to 18.2 percent currently.

The decision by the International Monetary Fund (IMF) early this year to restore its programme with Malawi with a disbursement of about US$20 million came as an icing on the cake on the economy and brought hope about the return of international confidence on the country.

However, although inflation has been falling, it still remains high. In fact, Malawi’s inflation remains one of the highest in the region. As a result, lending rates have remained too high and this is probably the biggest challenge facing the economy.

The heavy rains and floods that hit the country in January, followed by dry spells later have resulted into reduced food production, creating fresh concerns about inflation as maize prices are expected to increase sharply on the market, unless government intervenes with huge supplies of imported maize to frustrate speculative trading.

On the political front, the Mutharika government has made some blunders which have attracted heavy negative publicity and even street protests, thereby overshadowing some successes registered on the economic front.

The scandal at the National Aids Commission (NAC) involving dubious donations to the First Lady’s charitable trusts and Mutharika’s scribbling of graffiti on the walls of Kanengo Police Station cells where he was locked in after being arrested for treason while still in opposition immediately comes to mind.

The proposed privatisation of Malawi Savings Bank – although I totally support it, has also attracted heavy resent from opposition parties and civil society organisations.

Meanwhile, budget support still remains elusive and Mutharika’s government has once again had to come up with a national budget that is 40 percent short of resources which have over the years been coming from western capitals.

With the huge resources required for importation of food, it will be interesting to see how the government will implement a budget without resorting to borrowing which could only worsen inflation and interest rates, thereby taking the economy back to economic certainty.

On the scale of one to 10, I would give APM a score of seven in his performance over the past 12 months. #ThumbsUp Mr. President

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