We all deserve credit on IMF programme

Tom Sangala March 29, 2016

255 2 minutes read

President Arthur Peter Mutharika, Finance Minister Goodall Gondwe and the entire cabinet should be commended for working tirelessly to get the country’s programme with the International Monetary Fund (IMF) back on track. But all of us as Malawians also deserve credit.

It has to be recognised that it is the pressure Malawians mounted for an improved economy that has pushed the government to implement appropriate measures to get the programme with the IMF back on track.

Despite suspension of donor aid and drought that have made it very difficult for the government to balance the economy, Malawians have made it clear that they are not ready to take any excuse for poor economic management. They have simply demanded a better economy.

The programme went off track because the government failed to reduce expenditure in the wake of reduced revenue and went on a borrowing spree and accumulated debts beyond limits agreed with the IMF.

The consequences were serious as the suspension of the programme with the IMF resulted into reduced confidence in the economy which led to a massive depreciation of the Malawi kwacha.

Public pressure and discontent followed and the government felt the heat and started doing the right things to ensure that it gets back on track and respond to the demands of Malawians.

Among other things, the government drastically reviewed the 2016/2017 national budget and came up with cost cutting measures that have resulted into reduced domestic borrowing by Treasury to finance government operations.

This, combined with tight monetary policy measures by the Reserve Bank of Malawi, have made it not only possible for the Malawi kwacha to stabilise and begin to appreciate but also for the country’s programme with the IMF to get back on track. And Malawi continues to sit on relatively healthy foreign exchange reserves.

This is remarkable considering that the key factors that have been blamed for the economic meltdown in the country have not changed. Donors are still holding on to their dollars while drought has continued into the current cropping season. The country is once again expected to experience reduced agricultural production.

And the tobacco selling season is yet to get underway yet the Malawi kwacha has already started to gain in value.

The recent developments in the economy only demonstrate that it is possible to keep the economy in the right shape even when the country is experiencing some primary shocks.

While reduced foreign exchange earnings means increased pressure on the local currency and reduced revenues strain the budget, things can still be managed to ensure that the economy remains stable and that consumers and businesses are not disturbed because of government’s failure to tame its appetite for expenditure even when revenues are on the decline.

One positive thing emerging in Malawi is that the people have now become stronger and are able to mount pressure and demand action from the government to the point of forcing the leadership to respond.

Malawians are not longer a passive and dormant lot that sit back and suffer in silence when things are clearly going wrong as a result of poor leadership and mismanagement of the country’s affairs.

Between 1994 and 2011, the government only feared donors as it took the people for granted because of Malawians’ reputation of being meek and docile, even when the government was clearly off track.

But I have always said that the Malawian the world has known changed on July 20, 2011 when they surprised the world with record massive protests that resulted into a calamity and change in leadership in 2012.

And when the new government failed to recognise the change in the people and went ahead with its own style of mismanagement in the name of cashgate, Malawians once again showed their new colours and voted out a government for the first time since the attainment of multiparty democracy in 1994.

This time around, the reduction of donor aid also means reduced donor influence on the country’s affairs but it is now clear that Malawians have ably taken up from donors the role of pressurising the government.

The days of the government fearing donors while ignoring the views of the people are certainly gone. And this government needs to realise and accept this because they too risk facing a shock one of these days should they continue with politics as usual. #ThumbsUp to Malawians for successfully pushing the government to get the programme with the IMF back on track!