Malawi’s revered Governance and Human Rights Expert Undule Mwakasungula has described the national address President Dr. Lazarus McCarthy Chakwera delivered on Wednesday as key in providing the country’s roadmap to sustainable growth and stability.
In his address, President Chakwera outlined a comprehensive plan to revive the country’s economy in addition to the announcement that the Board of the International Monetary Fund (IMF) had resumed its direct budgetary support to Malawi with an approval of the Extended Credit Facility (ECF) amounting to US$174 million.
This is after a 10-year break following the revelations of massive public plunder of public resources by high-ranking officials at the Capital Hill.
During the Democratic Progress Party (DPP) administration, under the leadership of former president Professor Arthur Peter Mutharika, the Fund also suspended support because of “misreporting and misrepresentation of figures by the Reserve Bank of Malawi (RBM) under the governorship of Dr. Dalitso Kabambe”.
President Chakwera, in his address, said following the resumption of the direct budgetary support, Malawi will receive an injection of USD174 million dollars through ECF over the next four years.
He added that this also means the resumption of direct budget support from international partners after a 10 year absence because of the cash-gate and the financial mismanagement of the previous administration.
“The benefits of this IMF Program are many, but allow me to mention a few critical ones. First, the IMF approval will unlock foreign direct investments into the country to strengthen productivity. For example, as a result of our qualification for this IMF Program, several development partners have already lined up a number of financial facilities that will boost the supply of foreign exchange in our banks. This includes the World Bank’s US$60 million Trade Finance Facility that will assist domestic banks to support importation of strategic commodities like fertilizer, pharmaceuticals and industrial raw materials,” he said.
Reacting to the address, Mwakasungula said the approval of the IMF’s Extended Credit Facility, amounting to US$174 million over four years, marks a crucial path, signaling a return of international confidence in Malawi’s economic management.
He said the package is more than just a financial boost, as it paves the way for foreign direct investments and the resumption of budget support, which had been absent for a decade due to past financial mismanagement.
“The President’s address sheds light on several important benefits that are set to follow. Key among these is the unlocking of foreign direct investments to enhance productivity across various sectors. The World Bank’s commitment, including a Trade Finance Facility and an Agricultural Commercialization Project, is particularly noteworthy. These initiatives are expected to bolster strategic sectors like agriculture, which is a cornerstone of Malawi’s economy, and assist in the importation of essential commodities like fertilizer and pharmaceuticals,” he said.
Mwakasungula added that President Chakwera’s commitment on serving Malawians reflects a leadership approach that prioritizes long-term benefits and sustainable growth over short-term comfort, which is particularly commendable in the context of economic policy.
He said the President’s willingness to undertake difficult, but necessary actions, such as the devaluation of the kwacha, underscores a commitment to correcting systemic economic imbalances.
“The devaluation of a national currency is a profound decision, often accompanied by immediate economic hardships for the populace, such as increased prices for imports and a potential rise in inflation. However, this move must also be viewed as a strategic step towards realigning the national currency’s value with the actual state of the economy, thereby setting the stage for more sustainable economic development.
“Moreover, President Chakwera’s acknowledgment of the pain caused by such decisions and his call for collective adjustments in spending demonstrate an empathetic leadership style. It indicates an awareness of the sacrifices required from the Malawians and a call for shared responsibility in the economic rebuilding process. This approach not only fosters a sense of national solidarity but also prepares the people for the realities of economic reform,” narrated Mwakasungula.
He observed that President Chakwera’s approach seems grounded in realism and a keen awareness of the nation’s past economic challenges, thus acknowledging the painful yet necessary reforms undertaken to stabilize the economy.
Mwakasungula hailed Chakwera’s honest discussion about the tough choices made to correct previous economic mismanagements indicates a dedication to sustainable economic policies, despite the short-term hardships they entail.
“This approach is not only about rectifying past errors but also about laying a solid foundation for future prosperity of our country. Drawing from historical lessons, particularly the debt cancellation of 2006 under President Bingu, President Chakwera emphasized the importance of capitalizing on current opportunities. He cautioned against the repetition of past mistakes where economic gains were squandered. This perspective is crucial in ensuring that the newfound financial support and investor confidence are utilized effectively for the country’s economic rebound,” he said.
Meanwhile, President Chakwera, in a bid to reinforce economic discipline, has announced stringent measures aimed at curbing governmental spending, demonstrating a commitment to fiscal responsibility.
These measures include significant travel restrictions for government officials, a notable example being the President’s own decision to cancel his attendance at the COP28 conference, a move that underscores his dedication to leading by example. Additionally, a reduction in fuel entitlements for senior officials, and the implementation of strict criteria for public expenditure. These steps, taken together, are not only essential in ensuring fiscal prudence but also play a crucial role in building public trust and setting a tone of austerity and responsibility within the government.
Additionally, the President has demonstrated a commitment to protecting the vulnerable sectors of the economy through provision of support small and medium enterprises and provide tax relief to civil servants are welcome.
Mwakasungula said these initiatives are important for cushioning the segments of society most affected by the economic transition and for maintaining social stability.
“The President’s stance on consumer protection is equally firm. He commits to investigating unfair business practices and regulating utility prices to shield consumers from exploitation in the wake of economic adjustments. This proactive approach is critical in ensuring that the burden of economic reforms does not fall disproportionately on the general populace.
“In essence, President Chakwera’s address not only charts a course for economic recovery but also signals a new era of responsible governance and fiscal discipline for Malawi. While acknowledging the challenges and sacrifices involved, the address inspires optimism about the country’s potential for sustainable growth and stability,” he said.