By Charles Mponda
As Malawi grappled with the aftermath of careless economic posturing by previous regimes, President Dr Lazarus McCarthy Chakwera has taken bold steps to rectify the economic malais inherited from the previous government.
Soon after coming into office, President Chakwera terminated the Extended Credit Facility with IMF, a hard but necessary decision, considering the circumstances surrounding the program signed in 2018 but was later embroiled in lies and misrepresentation of the country’s economic figures to portray a rosy economic position.
All this was happening in the backdrop of other development partners and traditional donors suspending their support especially towards balance of payment or budgetary aid. Dr Chakwera’s subsequent efforts to regain IMF support and donor confidence underline his commitment to steering the nation towards financial stability.
The devaluation of the local currency on November 8, albeit met with public outcry, was a crucial component of securing IMF approval for another Extended Credit Facility on November 15. President Chakwera’s willingness to make tough decisions demonstrates his dedication to addressing economic challenges head-on. However, these measures need time to take root and yield positive results.
A mere two weeks after the IMF approval, the President announced a series of austerity measures, including a personal commitment to curtail his foreign travels and a 50% cut on fuel allowances for the senior government.
These actions are not only symbolic but also substantial, signaling his personal sacrifice for the greater good of the nation.
Even, the country´s donors and development partners seem to agree-if their recent actions are anything to go by. So far, the World Bank has announced a US$60 million Trade Finance Facility, US$217 million package to support fiscal reforms and US$250 million support for the Agricultural Commercialisation Project.
The European Union has also thrown in €70 million (US$76 million), African Development Bank (ADB) US$30 million, both towards budget support while there is another US$6 million support from the International Fund for Agricultural Development.
The Ministry of Finance announced that the austerity measures as announced by Dr Chakwera are expected to save the current budget a total of MK4.2 billion. Announcing this during the presentation of the mid-term budget review, Minister of Finance Simplex Chithyola Banda said the saved money will go towards productive areas such as the mega farms.
The mega farms initiative is one of the growth areas at the heart of President Chakwera as he has set his sights towards changing the narrative of Malawi being a predominantly consuming country to an exporting one.
Now against these exciting developments, the Public Affairs Committee comes in to call for additional measures, including a reduction in the number of Cabinet Ministers. This call seems to be misplaced or coming too soon. The November 15 austerity measures are still in their infancy, and expecting further sacrifices before their impact is fully appreciated is asking for too much, too quickly.
President Chakwera’s decision to cut his foreign travel alone is anticipated to save 4.2 billion Malawi kwacha in the current budget—an immediate impact. However, expecting additional measures before the nation has had a chance to witness the full extent of these initial reforms and the financial donor injections risks undermining the positive momentum gained.
While the Public Affairs Committee rightly serves as a governance body with the responsibility to advocate for prudent policies, it is essential to acknowledge what President Chakwera has done this far to address the economic challenges, especially in the wake of the devalued kwacha. Rushing into more austerity measures before the effectiveness of the current ones can be evaluated, may hinder the nation’s ability to fully appreciate their impact.
In these trying times, patience is a virtue. President Chakwera deserves the opportunity to showcase the benefits of the November 15 austerity measures before being pressured into further actions.
Malawi’s journey to economic recovery requires a measured and phased approach, allowing for the sustainable implementation of reforms that will ensure long-term stability and prosperity.