Borrow to invest, expert tells Malawi government
An economic expert, Professor Ben Kalua of Chancellor College (Chanco), has urged government to borrow funds from the Reserve Bank and other institutions with the aim of investing in long-lasting structures other than consuming.
Kalua told The Daily Times on Monday on the sidelines of an economic symposium to celebrate the Central Bank’s 50 years of operations that during the first years after independence, borrowing was being made to invest in different infrastructures like hotels which stand up to date.
“Borrowing for consumption should never be in the interest of anyone as long as economic growth is concerned. If you borrow for consumption, you are doing a dangerous thing because that can never lead to economic growth,” said Kalua.
According to the economics professor, borrowing from the Reserve Bank is resulting into high inflation rates, which resultantly stifle overall economic growth.
Minister of Finance, Economic Planning and Development Goodal l Gondwe also admitted that borrowing from the Central Bank continues stifling economic growth as it results into high inflation rates.
“If we look at the reforms that we are conducting, we will have to practice stringent fiscal discipline. If we do that, it means we will not require much borrowing from the central bank. Borrowing from the bank is the fountain of inflation.
“The governor and I have talked a lot but in the end I have to look at the realities of economics and agree with him that fiscal policies will have to be supportive of the monetary policies,” said Gondwe.
He added that the bank has retained its effectiveness and discipline such that it has been one of the better institutions in the country.
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