Austerity measures are not new in Malawi. What could be new this time might be if they succeed.
For a couple of times, government has been implementing the measures to cut public spending during hard economic times.
The question all along has, however, been whether there indeed are any expenditure cuts and what the funds, if any, have been used for.
We must accept that austerity measures are harsh economic policies intended to reduce the government’s budget deficit, and their outcomes do not often receive favour from those who benefit from the ‘extravagant’ spending.
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Top government officials who are often affected by austerity measures often circumvent the measures and end up spending as much as they would if the measures were not in place.
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We saw it last time government implemented authority measures in the country. Directives such as that all government vehicles should be packed by 6pm unless authorised by a controlling officer were never respected.
The ban on meetings taking place at the lakeshore resorts was evaded with simple moves from the lake to other equally faraway and expensive locations.
Senior public officials—whether they got permission from the Office of the President and Cabinet or not—kept globetrotting, apparently because the meetings they were flying to were very important.
Cuts on fuel budgets were beaten using other expenditures, the result being little or no money being saved at all.
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By the way, the truth is that calculating how much has been saved through austerity measures is tricky, because several other expenditures would still come into the picture.
The real austerit measures are not happening in Malawi. They are policies that can include reductions in government spending and increased taxes. Austerity measures are commonly used with contractionary fiscal policy or when a government faces debt default.
That is not what is happening in Malawi. When a government increases its taxes, it generates more revenue. When a government reduces its spending, it has more money to pay down its debt, according to experts in policies such as this.
They admit that austerity can be contentious for political and economic reasons. We saw what happened last time, when the measures were met with some silent resistance from those they impacted most.
In fact, even some civil society organisations accused government of stifling hospitality industry business by banning lakeshore meetings. It is true that though the measures can control government’s budget, they impact the day-to-day life of citizens who even feel more powerless when measures to cushion a massive devaluation of their currency fall short.
Right now, we are talking about meetings being conducted in public institutions’ boardrooms to cut their budgets.
This means the little that the public officers could get, in the form of allowances, may not be adequate to meet their families’ daily needs, especially considering that raises to their salaries do not come anywhere near the devaluation.
That is where it becomes difficult for such officers to strictly implement the austerity measures. Authorities can talk about the allowance culture being something that should be dealt with, but the truth remains that the extra income that officers in both public and private institutions make is what keeps them going.
No one should pretend that their lives can be the same if the allowances were scraped off and they survive merely on their monthly salaries.
By the way, the allowances are part of the benefits that workers are entitled to. Back to the core issue, the austerity measures: There always are indications that government itself, through its top authorities, is not willing to make them a reality. There is no clear reduction of expenditure.
A government that implements austerity measures is willing to take steps to bring financial health back to their budget, which are struggling with funding gaps.
In the case of Malawi, it is pretty difficult for the measures to be real, when a large chunk of the budget is supposed to be covered by loans and grants. In short, the deficit is so huge that the austerity measures become literally unimportant.
In fact, in many parts of the country, the effectiveness of austerity measures is a matter for intensive debate. Their ripple effects make people suffer even more.
Proponents of the measures argue that “regular” spending when an economy is bleeding can suffocate the broader economy, limiting tax revenue.
Opponents, on the other hand, believe government programmes are the only way to replenish for reduced personal consumption during a time of economic depression.
