Analysts react to JB’s take on Malawi economy

Mixed views have emerged on President Joyce Banda’s stand that there has been significant progress on the country’s economy for the past 12 months since she assumed power.

In her state of the nation address in parliament last Friday,  President Banda said economic reforms have resulted in notable positive progress in the economy and appeal for the nation’s continued understanding.

Malawi’s economy was on a brink of collapse after Mutharika, who died in office of a heart attack, picked a disastrous fight with donors whose support accounted for almost 40 percent of the budget.

“The developments we have seen in the past 12 months must give us hope that the reforms are working. Yes, there has been pain, and we may continue experiencing pain, though at a reduced level for some time. This is expected any situation like we found ourselves in.

“Mr. Speaker Sir, it is expecting a miracle for one to recover from the economic death bed without feeling pain. The pain we are suffering is the price we are paying for allowing ourselves into the situation we found ourselves in.

Kapito: Talk should match with action
Kapito: Talk should match with action

“It is my hope and prayer that we will learn from the past and accept that procrastinating to take tough decisions for short term gains or to feed our personal political greed will always lead to painful situations,” President Banda said.

However, the Consumer Association of Malawi (Cama) has reiterated that time for speeches is gone and said government must consider adopting to measures that will lessen pain on consumers who continue to pay more for commodities despite government’s minimal reduction of fuel.

Cama Executive Director John Kapito said there is too much talk from government with little action to support it.

“This is not the time to remind us consumers of how much less value our hard earned money has become but people in power must flex their muscle by ensuring that the ongoing commodity price increases is stopped,” said Kapito.

He said reiterated that if government is serious about protecting consumers it must evoke its powers and come up with the long awaited consumer council and effectively empower the Competition and Fair Trading Commission which has been dormant and understaffed since its establishment.

But market analyst Chikavu Nyirenda said the economy still requires time to get back on its feet with the fact that it was in a state of near collapse 12 months ago with no fuel to run on and depleted forex reserves which led to no supplies of essential imports such as farm inputs, drugs and fuel.

In the address President Banda said the economy expected to rebound as GDP growth surges to around 5 percent underscoring the success of the economic reforms that my administration implemented in 2012.

She said prospects for 2014 indicate that the economy will grow at an accelerated pace of 6.1 percent as the policy measures we implemented in 2012 take full effect.

President Banda also said in spite of the many challenges facing the government, the fiscal performance for the 2012/13 financial year was on track with overall domestic revenues surpassing target by K0.6billion, largely on account of tax revenues, which amounted to K120.9billion against a program target of K118.9 billion.

“However, non-tax Revenues underperformed by  K1.5billion largely on account of low collection from fuel levies and Revenue-collecting Departments such as Lands and Housing and Road Traffic. Mr. Speaker Sir, Government contained its expenditures within the target. A total of K242.6billion was spent against a mid-year target of K249.8billion,” the President said.

She also said government repaid domestic debt amounting to K18.2billion against a repayment target of K17.7billion, a slight over-performance by K0.5billion and thereby reduced the stock of domestic debt from K188.9billion to K170.7billion.

Banda has wooed back foreign donors and worked with the International Monetary Fund on a new financial support programme. Her government has also removed fuel subsidies and cut the kwacha’s peg to the dollar, which resulted in a 50 devaluation for the local currency.

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