Malawi economic outlook grim, opposition leader Nankhumwa calls for strict financial discipline to avoid ‘crisis of unprecedented levels’

Leader of Opposition in Parliament Kondwani Nankhumwa has  said it is “an open secret” that Malawi economic outlook is grim and has called on President Lazarus Chakwera and his Tonse Alliance government to ensure strict financial discipline to avoid ‘crisis of unprecedented levels’.

He was speaking during the closing of the mid-term budget review meeting of Parliament in Lilongwe on Friday.

Said Nankhumwa: “Inflation is on the rise and the resultant effects can tell. Our people are day by day becoming worst off. The continued increase in the pump price for fuel has become the cancer that is eroding the disposable incomes of our people. Obviously, this is further shrinking our Per Capita income.

“To most people, life is barely survival and we are slipping miserably on the path to becoming a middle income economy. As at present, we risk remaining a permanent member of the Least Developed Countries and even cherishing being its President.”

The Leader of Opposition also pointed out that the country’s trade balance is easily telling that Malawi is standing too far from the great dream of becoming a predominantly producing and exporting country than the perennial predominantly importing and consuming country.

“From the end of 2019, the trade balance has worsened from US$352.8 million to US$566.7 million. Gross Official Reserves are even giving us no hope, sharply contracting from US$846.6 million to US$574.3 million over the same period.

“The Malawi Kwacha is also steadily losing value, depreciating by 5 percent from July to December 2020 after almost a five year period of stabilisation,” he said.

Nankhumwa said the negative trade balance is expected to persist as the country will continue to import more due to Covid-19 and export less due to contraction of economic activities in the country.

“This shall result in a widened balance of payments, which will fuel further depletion of gross foreign reserves and depreciation of the Kwacha,” he pointed out.

Nankhumwa said the high growth rates that the Chakwera government is projecting are “exaggerating” domestic revenues, especially taxes, which  he said may not be realized as companies may not produce any substantial taxable output.

“This may result in our domestic revenues getting off track as was the case in the first half of the financial year,” he said.

Nankhumwa advised   the government to maintain strict financial discipline and fiscal prudence under the current grim economic outlook to avoid an economic crisis of unprecedented levels.

“Indeed, the government must ensure strong fiscal management to avert financial resource leakages as well as maintaining public domestic debt levels that are sustainable to avoid public debt distress,” he said.

The Leader of Opposition further said that it saddens every Malawian to note that the government has significantly overspent within six months and has borrowed almost 600 billion Kwacha domestically bringing the total public domestic debt to a whooping 4.5 trillion Kwacha.

“What could the Tonse Alliance government have been thinking? Where was all this money channelled to, and yet civil servants such as teachers are being denied Covid 19 risk allowances? The nation is waiting with abated breathe to know the leakages where the money has spilled into,” he said.

Nankhumwa said he is fully aware that apart from claiming millions of lives globally, the Covid 19 pandemic has also destabilized local, regional and global economies, citing the IMF that  gross domestic product (GDP) for Sub-Saharan Africa has contracted by negative 3.2%.

“However, it is also during hard times like these that leaders rise to the occasion and demonstrate leadership agility. The country’s leadership should instil confidence among Malawians that it can manage a crisis and save the lives of its people.,” said Nankhumwa.

He then commended the Presidential Task Force on Covid-19 for its efforts to ensure that there is coordination and soberness in how Covid-19 funds are utilized.

The Leader of Opposition also applauded the government for its decision to audit all transactions taken by all clusters that are using Covid -19 funds.

“However, Malawians are eagerly awaiting a report on how the initial COVID-19 funds were utilized,” he said.

Nankhumwa, nonetheless, commended the government for listening to opposition  counsel to introduce Covid -9 cash transfers, which go a long way in cushioning the effects of poverty, especially among the ultra-poor.

“The DPP government, under former President His Excellency Professor Arthur Peter Mutharika, successfully implemented this programme. However, the way the Covid 19 cash transfers have been implemented this time has left a lot of gaps, especially at targeting.

“My understanding is that the programme is meant to help the poorest of our society survive the economic effects of the pandemic. But what we have seen is that even those that are economically well-off have also benefited from the Covid 19 cash transfer programme,” he pointed out.

He called on the government to rectify the “anomaly” so that the programme benefits the most vulnerable people, particularly the elderly, people with disabilities and persons living with albinism.

Nankhumwa further said this will also bode well with the Tonse Alliance government’s pledge that once voted into power, it would pay the elderly money for their upkeep.

Follow and Subscribe Nyasa TV :