President Peter Mutharika has put a brave face following the International Monetary Fund (IMF) suspending of loans to Malawi for failing to cut its wage bill and improve revenue collection, saying his administration will implement what IMF has recommended and the economy will not collapse though it is less likely Western donors will resume budgetary aid.
The IMF said the loan facility would remain suspended until Malawi’s government met certain targets.
IMF mission chief for Malawi, Oral Williams, said restoring macroeconomic stability by bringing inflation down to single digit remains a key precondition to fostering and sustaining growth in the near to medium-term.
Economics feels the current economic situation, as assessed by the IMF, will culminate into worsening donors’ confidence and further frustrate both foreign and local investors as there is a gloomy economic outlook.
But addressing a news conference in Lilongwe on Thursday, President Mutharika said the country’s economy will not collapse and that Malawi will get back to track by December but conceded that Malawi is in “complicated situation.”
“It’s not a crisis, economy is not going to collapse,” said Mutharika in the news conference covered live on Malawi Broadcasting Corporation and monitored by Nyasa Times through online streaming.
“People are saying a lot of things, ng’we, ng’we, ng’we. I am the first President to run this country without donor support,” said Mutharika, saying his administration is being punished by the wrongs of the previous Peoples Party government.
Donors withdrew their 40 percent contribution to the recurrent budget in October 2013 amid concerns of Cashgate, the plunder of public funds at Capital Hill.
Mutharika said he had predicted about IMF off-track situation: “I said it in April that if we are not careful with how we are spending, we will go off track. I hope you now believe me.”
The President said the global lender gave condition to his government which were to sell Malawi Savings Bank ( government sold the bank to FDH Holdings), sell IndeBank (sold to National Bank of Malawi), reduce wage demands, saying there is “relentless demands for salary increase.”
He said in rather furious tone: “This business of putting deadlines on the government [for pay hikes] must stop. Let’s show some respect to this government. This nonsense has got to stop. This government was elected by the people.”
Mutharika said government has failed IMF test among other things by giving pay hikes to public servants, saying they were “forced to borrow from Reserve Bank of Malawi.”
The President said public servants should sacrifice to work for living wages, saying they can go to private sector if they want to be rich.
“It’s a sacrifice to work for government,” pointed out Mutharika.
Mutharika urged public servants to desist from calling for industrial strikes over pay hike.
“If you strike you are hurting your country, you are not hurting me,” said Mutharika, pointing out that Malawi has a wage bill which is one of the highest in the world.
The Head of State said the IMF position should not cause panic as his administration will put measures to bring programme back on track, including a revised fiscal framework sufficient to meet the end December 2015 program target on net domestic financing and a tight monetary stance.
“As long as human beings are there, there will be problems and challenges and we will try to resolve them,” he said.
Mutharika said he campaigned on a platform of bringing transformational leadership and is implementing his electoral pledge.
“Transformation means change. We are making changes. You wanted transformation, you have it now,” he said.
Mutharika said he is working tirelessly to ensure Malawi get economic growth.
“Every country in the region except Malawi is booming. Tanzania is ahead. Even Zimbabwe with the sanctions, are ahead of us, why?”
The President said his critics and opposition leaders have not come forward with alternative strategies to help Malawi out of economic doldrums.
“Not a single person has come with alternatives. They have nothing to say,” he said.
Mutharika stressed that government is geared to improve business environment and the macroeconomic situation in general.
“We will try very hard to cut on borrowing; spending and I am sure by December will get on track. I don’t want anyone making demands for salary increases. We don’t have money,” said Mutharika.
IMF also suspended the fund’s supported programme, the Extended Credit Facility (ECF), in 2012 when the Malawi government failed to devalue its currency, the kwacha, and reform public financial management.
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