The International Monetary Fund (IMF) released a statement on 29th September following its ninth review mission to Malawi between 14 and 28 September. In summary, the statement concluded that Malawi missed a few targets and hence new targets were set. The IMF has now agreed with the Malawi Government to extend the programme from its original end-December 2016 to mid-2017.
The head and tail of this extension is that agreed certain targets of the programme have not been met. In other words, the patient did not adhere to the prescribed drug regime and, as a result, the treatment has to continue beyond the original schedule. This patient is still in trouble, the patient might be getting better or getting worse, what is certain is that the patient has not been cured. This patient called Malawi needs to continue being on treatment until mid-2017. I am not sure whether I should celebrate or get angry at this extension.
The IMF uses various loan instruments that are tailored to different countries depending on their balance of payments (BoP) needs and the specific circumstances of each country. Countries which are classified as Low-Income-Countries (Lics), the group in which our wonderful Malawi has become a permanent member of, may borrow on concessional terms. The advantage of concessionary loans is that they currently carry a zero interest rate.
Under the concessional loans, the IMF uses three types of instruments. The first is the Extended Credit Facility (ECF). This is a medium-term support to countries facing “protracted” BoP problems. The fact that Malawi is on this programme is a testimony that our problems have been protracted. The second type of instrument is called the Standby Credit Facility (SCF) and instruments that provided technical assistance to Lics with short-term or potential BoP problems and finally there is the Rapid Credit Facility (RCF) which applies to Lics facing urgent BoP needs. This, therefore, means to me that any extension of the ECF programme for Malawi is never something to celebrate! We should not celebrate the fact that the patient’s treatment is continuing beyond the original doctor’s predicted prognosis due to the fact that the patient did not meet all the requirements of the prescription.
In fact, the World Economic Outlook released by the IMF last week at the IMF/World Bank Annual meetings estimates that the country’s economy will only grow by 2.7 percent in 2016, this is below the three percent estimated by the same institution in April 2016. Compare this to the overly optimistic projections of 5.1 percent the Ministry of Finance used in the preparation of the budget. However, the Nutcracker is not surprised; this is the same minister who in August 2015 was quoted as saying “we have taken bold steps to jump-start the economy and I am certain that next year, you will be clapping hands to government”. I do not doubt the fact that the steps were taken but I cannot remember any single Malawian clapping hands in May 2016 when inflation was 21.5 percent and by June 2016 it had edged upwards to 22.6 percent!
The question perhaps we should be asking is what is really wrong with the economy? What is the real disease this patient called Malawi is suffering from? Why is it that every time the patient gets some treatment, the patient does not get cured? Why have the local and international doctors not found a real cure beyond these superficial clinical analyses of why the patient is in trouble? Hoping that Malawi will get better due by good will and good intentions is not working. Without taking decisive actions and proper policy decisions simply hoping for projected upturn of tobacco prices in 2017, good rains this agricultural year (all of which are not under our control), may indeed be building castles in the air.
This patient, instead of taking the problems head-on, is not only too shy of confronting the fundamentals but is also too scared of facing real realities. His mindset is corrupt, false, fraudulent, opportunistic and potently predatory. This is the patient that is Malawi. Is the patient beyond redemption? Obviously no!
What is wrong with the economy has been wrong for too long in the name of corruption and rent seeking. The institutionalisation of corruption has reduced the job of governance to merely sharing public money. A successful Malawian i s synonymous to someone who has the greatest ability to devise legitimate activities and projects with which to steal public resources. It has now become common in the establishment that a public officer does not have to produce plans of how to develop and empower the people. His mind is focused on how to steal public money in one way or the other. Not how to build roads, schools and hospitals or power plants but how to use these noble projects to fill his personal pockets and car boots. And until the patient undergoes a fundamental mindset, whatever kind of concoction of strong economic antibiotics will not save them. This patient is fast developing a drug-resistant strain of corruption.
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