The State House on Monday differed with the International Monetary Fund (IMF) on its position regarding the effectiveness of the newly rolled out K160 billion Affordable Input Programme (AIP).
In its October 21 Rapid Credit Facility report, the IMF said, while it supported the objective of supporting vulnerable rural households to alleviate challenges such as poverty and food insecurity, it believed that targeted cash transfers such as the Social Cash Transfer Programme (SCTP) were more effective in supporting rural households than the AIP.
“Staff also expressed concerns over the narrow focus of the program on maize as opposed to the Fisp [Farm Input Subsidy Programme] which also supported other crops; risks if the farmer registry and the National ID system are not sufficiently linked; and literacy constraints of beneficiaries that could affect the functioning of the e-voucher system.
“The authorities agreed to consider future reforms to improve the programmes efficiency and effectiveness,” the IMF said in the report.
On a positive note, the IMF noted that administration of the AIP using e-vouchers based on a farmer registry that is linked to the National ID system provides a transparent targeting mechanism.
But answering a question from reporters on Monday, State House Press Secretary Brian Banda said it was the wish of President Lazarus Chakwera that Malawi would defeat perennial hunger in the country.
“I don’t know if people may have a problem with the stand that the President has taken to fight hunger. What the President wants to do is to make sure that we deal with the problem of hunger and if people have a problem with that then maybe something is wrong.
“What organisations like the IMF and others should do is to make sure that we help the President in making sure that the problem we have been having in this country almost every year should be dealt with once and for all,” Banda said.
In its report, the IMF also raised some questions over economic benefits of raising salaries for civil servants.
According to the IMF, progress is being made in reviewing the existing payroll with a view to eliminating ghost workers and other fraudulent claims while safeguarding the jobs of recently hired health care and education employees by early 2021.
‘Staff supports these measures but noted that the resultant savings are unlikely to offset the wage bill impact from the substantial FY [Financial Year] 2020/21 public sector salary increase (0.9 percent of Gross Domestic Product) that will likely be permanent. The increase appears generous, where public sector employees are already benefitting from the doubling of the personal income tax (PIT) threshold (which reduces their effective PIT rate).
“The benefit to economic growth and development from this salary increase is also likely to be more limited than if the resources were used to further boost targeted cash transfers to the more vulnerable (who have a higher marginal propensity to consume domestically),” IMF said.