From Goodall to Badall! Malawi minister of finance ‘cooking up’ GDP growth rates

Minister of Finance Goodall Kayiwonanga Gondwe has been ‘cooking up’ Malawi’s GDP growth rate from 3.2 percent to 5.4 percent to bluff Malawians and the world at large that the country’s economy is track when in fact it is in a sorry state.

Finance Minister Goodall Gondwe tabled the financial plan which MPs are deliberating

Finance Minister Goodall Gondwe : Tweaking figures

New revelations from the IMF, World Bank and highly placed internal sources in the Malawi government indicate that the revered Minister of Finance, Goodall Gondwe, an astute economist, has against evidence from the NSO, Ministry of Finance and the IMF insisted on capping Malawi’s Gross Domestic Product (GDP) growth rate at 7percent.

Ironically, this is 3.8 percent higher than the accurate estimate of 3.2% by the National Accounts and Balance of Payments Technical Committee chaired by the Ministry.

The current projection of 5.4 percent was a compromise by the IMF arrived at reluctantly in order to sign-off Malawi’s programmes.

GDP is the total monetary value of all goods and services produced within a nation’s geographical borders over a specified period. GDP growth rate is a measure of the rate of change of a nation’s GDP from one year to another.

One big question everybody would ask is; why an Honourable man such as Goodall Gondwe who is reputed to be a knowledgeable and respected economist would deliberately misrepresent economic projections?

The reasons are simple. Malawi’s economic problems are a result of this ‘fixing’ of GDP projections.

In principal, when the government submits a higher GDP projection it automatically raises its projections for revenue and this means that higher GDP means government will have a larger tax base from which to collect tax.

This, in turn, means that the government can argue that the Malawi Revenue Authority (MRA) will have higher revenue collections than would be the case with a lower GDP.

But why would praiseworthy experienced economist Goodall Gondwe want to register higher, but false GDP growth rate which creates the impression that there will be higher tax revenues than can be collected?

The reason is that higher revenues then allow government to have a bigger budget, higher public spending projections. This allows the government to submit to parliament a higher budget on the basis that the government will be able to raise the revenue to finance it.

One would ask how then does the government get to finance such a high budget when it cannot raise the revenue it claims will be collected. The tactic is simple and that is the key source of Malawi’s economic problems.

When the Budget is passed on the basis of these high but unachievable revenues, the government then proceeds to borrow from the central bank, the Reserve Bank. This is called domestic borrowing and it means printing money which then increases inflation (putting more money in the economy when the volume of goods and services has not increased)

This results into higher prices since there is more money to buy fewer goods. Remember since the GDP is lower than that submitted, there are fewer goods and services to purchase but more money and so prices go up.

The other problem created is a higher exchange rate.

Again, since there is more kwacha in the economy chasing fewer forex the price of forex increases making the cost of imports higher.

But what compels a supposedly rational man like Hon Goodall Gondwe to make this horrific choice. As an aging politician in deteriorating health who still wants to remain relevant to the politics in Malawi, Goodall has to make sure government has money to spend and embezzle.

This is how he does it.

Once the loan money is paid to treasury from the Reserve Bank to meet this gap created from lower MRA collections, it is all allocated to recurrent expenditures and not development expenditures.

The recurrent expenditure is money for government operations, salaries, travel, offices, state residences and vehicles and this money does not go to development expenditure.

Finance Minister Goodall Gondwe has calculatingly chosen to feed his political masters at the expense of the entire Malawi nation in order to keep his job by parading as an economic genius.

Evidence of this inaccurate and misleading GDP Growth Rate projection can be seen in the IMF Letter of Intent which Nyasa Times has seen, in which the current finance minister Goodall Gondwe, also commends ousted former President Joyce Banda for introducing a flexible exchange rate regime.

“…Important to these ends will be preservation of our flexible exchange rate regime and automatic fuel pricing mechanism, both of which have served us well since 2012…” Goodall Gondwe is quoted as saying in part in the IMF letter of intent.

But most disturbing is Goodall Gondwe’s admission that the government despite its trumped up rhetoric about civil service reform has so far just undertaken 22 of the 66 reforms needed to fix IFMIS, the system used for Castigate.

The Letter is co-signed by Governor Charles Chuka who presided over the Reserve bank during the infamous Castigate Scandal.

A policy and socio-economic analyst, McBride Nkhalamba based in Sandton, South Africa recently told an international policy and economic conference which was held in Johannesburg, South Africa that it was unfortunate that Malawi is living a lie by inflating figures saying doing so was uncalled for and a cardinal sin to economic development.

“Malawi is on a fast lane to economic debacle and at the rate we are going, if nothing is done, Malawians must brace for tougher times. Malawi has so many vibrant young economists who if given a chance can help in turning things around but we seem to be too comfortable with the ‘old guards’ who have run of steam and can no longer offer anything to our modern economic needs,” said Nkhalamba.

Goodall Gondwe who has both worked for both the IMF and World Bank has twice served as finance minister in the two Mutharika brothers’ DPP governments.   

It appears that the old man is no longer good as he used to be or what he has known to be, in fact he is needs to change his name from ‘Goodall’ to ‘Badall’ because he is now so bad as an economist and it seems he has lost his mojo. He is now more of a political millstone and a spent-force and too bad for the country and all the hard working citizens.

  •  Peter Kalombodza is a social and economic commentator based in the Malawian capital, Lilongwe.

 

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39 thoughts on “From Goodall to Badall! Malawi minister of finance ‘cooking up’ GDP growth rates”

  1. mtumbuka says:

    The author of the above article has done the best to informed malawians but to un informed malawians it will remain a trash.how i which every malawian has a chance to study macro economics. No i know why goodall can comfotably cheat us coz he knows ignorant majority will defend him on the expes of informed minority..next time will see you who are defending goodall in streets with placards demanding wage and saraly hike its a pity to demand valueless money while you reject and ingonor the root cause..yes govt has to print money but money has circulating effect which can ruin the economy to That of zimbambwe 2008,u may which to know that zimbabwe gvt did the same thing that goodall is doing today u know what happened..yes im atumbuka but so long as respectable goodall is fooling our economy i will not party with destruction im still young i dont want to inherit trash of once the great economist

  2. ibrahim makwati says:

    PLEASE MR PRESIDENT FIRE FINANCE MINISTER NOW

  3. Nganga says:

    Kanthu uko, it is you who is dumb. You mean to say GDP cannot be cooked up? What you should know is that government is so powerful that it can do anything. It can print money. Do you know that? It can use services and goods and not pay them. Do you know that government is owing the private sector over K150 billion. This represent goods and services that were used by government and added to country’s GDB but without money involved. Where were you when Dr Ken Lipenga ( govt) borrowed money from the banks and used it as income for MRA, hense government. Kanthu ako, you are a shame. You don’t know what govt can do!! Don’t respond to this becuase you don’t know what you are talking about. IMF /World Bank use figures provided by government.

    1. Kanthu Ako! says:

      The article does not say Government manipulated GDP, it says Gondwe manipulated GDP, that is my argument.One person can not manipulate GDP.

      So who is dumb there? Read then comment.

  4. Nkhwatakwata says:

    The explanation of why the figures are cooked up is not convincing, indeed the economy is going through tough times, but an economic system is like an organism, it takes time to recover. It’ s only a mechanism that recovers immediately after replacing the faulty parts. And which World Bank are you talking about? Isn’t only last week that the world bank representative in Malawi said that he was surprised that the kwacha is falling when it is sitting on more than three months of import cover? Prof. Kalua said that the kwacha was deliberately devalued so that tobacco farmers should rake in more kwacha. Kalua said the intention was good but the timing was not good as most of the farmers have already sold most of their tobacco. I am not an economist but this is a matter comprehension which is studied at primary level.

  5. all-i-can-say says:

    The problem with Malawians as a people is that we are too blind to realities. As long as the one who is in charge is nganya (ie from my tribe, region), it does not matter what they do, We can never see things critically. This kind of thinking encourages poor accountability and this can be seen with the quality of leadership and arrogance being exhibited all the time. In short, they know that there are other people who will never criticize their poor governance practices.

    As a nation, we need to build structures that ensures total transparency and accountability from our leaders, otherwise, we are missing one of the most important ingredient in socio-economic progress. It’s us citizens that must demand accountability and the media are part of that solution. Impressive economic performance will not be talked up but will be noticed by increased living standards of the people. Let’s look around and examine whether or not living standards are improving for the very poor in society.

    Let’s expose poor practise wherever it occurs and as a nation we must learn to criticize and be criticized without taking offense. This country belongs to us all!!

  6. Issa says:

    kanthu ako is as useless as good-whore. Don’t tell moi you are so stupid to know that politician cook up figures? Remember the issue of Ken Lipenga?

    1. Kanthu Ako!! says:

      You are small minded, you do not think for yourself. Anything that is in a news paper is not always true. But with your small mind as shown in your language, you can not think beyond,”Zili munyuzitu ndizoona”

      A single person manipulating GDP? only a fool can believe that.

  7. Cardiac Doctor says:

    Chitsiru chindere. Minister wopusa kwambiri. Too nepotistic idiot.

  8. Demba says:

    No comment!!

  9. Ndoda yabwandila says:

    A Tumbuka siwanthu yayi ndi a
    kawalala onse

  10. Namalira says:

    This reads like a Nigerian movie. Too many twists and unrelated connevtions that show the uthor doesn’t know what he is talking about

  11. baba says:

    Chindele iwe chindele Goodall .munthu wakuchekula kale mwakuti wanthu wazakakumbuke nantchito ziweme palawafwa. Wakhalaso palinga nawe nyengo yikumalile wukwiba nakuteta. Fumapo pa wudindo wanyamata wanjilepo

  12. If u will call Bingu left our economy in shambles but Mkwezzalamba a young economist fixed. Now old and matchona are running the show have gone back to lies. U will remember that even during Bingu’s reign they were cooking projections and tdy they are at it again.

  13. dungulinya says:

    To Nkhalamba McBride if true, best to castigate your country from within than in international fora

  14. With due respect Goodall Gondwe should just step down otherwise he will endup being imbalanced wa kalamba musiku umenewo kumanamiza Dziko

  15. Telling the Truth says:

    Even the July 2015 tax revenue collection MRA undercollected by K6billion. MRA met the target of K52billion for July 2015 because of PAYE of K6billion for June 2015 which was collected in July 2015.

  16. Mulungu says:

    Kodi this writer is an IDIOT – Castigate chani?? Its Cashgate u dwanz!!!

  17. Wamandasi says:

    That’s the problem with western controlled black media. A white man has to confirm what a black guy does to make it right. In Malawi we do not have economic reporters and journalist who probe and investigate stories in a professional sense. All they do is copy typist who paste what they read somewhere.

    Andu Opuza munapanga bwanji?.

  18. Jelbin mk says:

    A Mr kanthu ako u have missed the point mwina chingelezi chinakuthawani the writer has been more than clear in his putting there are no politics in this article and its only a dunderheaded person who will not understand this content because the writer has used simple English in other words we can say he has communicated. Anyway do you believe that there is no one in Malawi who can do better than Goodal? If your answer is yes then you must be stupid to believe that because whatever happens Goodal has less than 10 years to perform because age is closing in on him so you mean after Goodal’s departure the post of minister of finance will be unoccupied? And what kind of good work has Goodal done so far that we should praise him for?

    1. Kanthu Ako!! says:

      You are talking the same rubbish, you are against Gondwe, not the economic policy.

      Yes your writer has written simple English,which is not what you use then you do an economic analysis. You use economic language which is far from simple. This write up panders to idiots like you.

  19. Jelbin mk says:

    I have never trusted any person from the dpp they are all as bad as nothing even Chilima is not an angel if he was he would have resigned already but since he enjoys the show he is part and parcel of the mess. This is another way that these crooks steal from the poor. If I understood the article very well it said the more the GDP the higher the tax base which means we have to pay as we produce and to the contrary we pay more than we produce which is very very unfair and of course uncalled for and barbaric.

  20. Zanga Phe Basi says:

    Yes these lied to the nation before about MRA collections. This time around they are at it again.

    go die in your village enukweni you goodall. stupid economists with no love for the country.

  21. Kanthu Ako!! says:

    What a shame!!

    So these are the Young men Malawi has to take over from the likes of Goodall Gondwe.

    What Kalombodza has written is just a reflection of the hate and venom Malawians have for anyone who is doing a good job.

    Ask any economist worth their salt, they will tell you this whole, I do not not know what to call it, is a load of rubbish.

    You mean to tell me, there are people out there who believe that a minster of finance can manipulate a countries GDP?

    GDP is the monetary value of the goods and services produced within a countries boarders in a specific period of time.

    The problem with people like this Kalombodza is that they think production is only Tobacco, maize and ground nuts, etc. and because we face hunger for lack of food, therefore GDP must be very low, what an idiot. Malawi concentrates more on the services industry, Insurance,tourism even education, that, is also production and it counts towards GDP.

    Do not mix politics with economics. What is wrong with Gondwe commending Joyce Banda? are you suggesting that because Joyce Banda did not see eye to eye with Gondwe, he can not commend something good that Joyce Banda did? That is stupid political thinking nothing to do with economics.

    To suggest that the economic policies of this country are Goodall Gondwes policies is so dumb, and to mix in with that by saying Gondwes policies are meant to allow embezzlement sounds to me like someone who is missing cashgate money given to them by Joyce Banda.

    I have never seen Goodall Gonbdwe refered to as Goodall Kayiwonanga Gondwe, that alone says a lot about the person that wrote this article, It is personal.

    Please tackle Goodall Gondwe on a personal level elsewhere, not disguising it as economic commentary.

    For an economic commentator not to understand what a projection is, says a lot about the so called youth that want to take over.

  22. i guess mr goodall a badall to be,is trying to play us.i dont know why he is still holding that office yet he has shown yo us that he is no longer campable of dealing with our huge problems.let alone times and efforts solve these caramities

  23. pwepwete says:

    Ee mavuto alipo shaaaaa ine kwali chalo lero

  24. MWAPIYA MULHUPALI says:

    This Bwampini guy is useless.Hey he failed us before Bigtime.Afterall, Bwampini already failed to run all ministries he headed with distinction under his watch.How come you are expecting wonders from him. Poor Malawians.

  25. Trevor Manyi says:

    Cooking the books MBAVA.bwezerani 577 BILLION yathu

  26. mbani says:

    everything will be exposed one day u don’t play with pples miyoyo

  27. fight says:

    REVOLT!!!!! I wish i was a dedicated moslem.

  28. Ahhed says:

    Simunati Mota Engil ayipatsa tax holiday yokwiya for mining project, anyamata opanga appraise project atakana Godall ndi Pitala nkupereka anyamata awo osadziwa. Tiyeni nazoniiiiiiii

  29. chimwemwe says:

    Goodall ma khalamba you are ruining this country with manipulations of the kwacha depreciation, taking more people into poverty please resign we need young faces

  30. Wayiwonanga says:

    Midala iwiriyi yitivuta ndithu. Badall ndi Chepetulo.

  31. Achimidzimidzi says:

    Time will tell it all.

  32. geo stream says:

    So Malawians are this dull? They don’t know that these are projections that vary depending on assumptions on the table . You are so dull to believe one individual can fix GDP. You are so dull that you think all the institutions like world bank get their GDP rates from Goodall. You don’t know these other institutions carry out independent projections. Yes dull malawians no wonder you wanted JB to rule you

  33. Magadi Mwase says:

    If it is a means of printing more money…then why can’t government print more money for capital projects as opposed to recurrent expenditure…I’m no economist.

  34. Patriot says:

    Nothing new here, remember nthawi ija kuti they cooked up MRA collections, and zinadziwika kuti anabwereka ndalama ku ma banks.
    DPP has failed basi.
    Step down.

  35. Professor Mwanaveka-Cypress University says:

    Badall Gondwe;, tribalist, mbava, misinformer, crook, nyapapi. Hule

  36. Zatha says:

    Mzungu steps down zikamuvuta but munthu amati “what will I do outside politics?” Am stil young! These are people that need to engage an extra gear in preparing for the next life and not managing the economy!

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