Our Weekly Comment
One of the factors that has contributed to the underdevelopment of Malawi is lack of continuity. New governments do not acknowledge the performance of preceding governments and often simply abandon whatever projects the government was implementing. They often assert that they inherited empty coffers. This is how Peter Mutharika reports the situation he inherited when he came to power: “When I came in, we found only one month’s worth of import cover – the lowest in the history of our country”.
This is not true. We have plotted the available data in Figure 1. The situation actually applied to Joyce Banda when she came to office. Foreign exchange reserve began declining during second terms of Muluzi's presidency and the decline continued under Bingu, albeit at a slower pace. When Bingu took over office in 2004, Malawi’s forex was enough for 1.3 months of imports. By the time he died, this had fallen to 1.1. months. Under Joyce Banda, forex reserves rose sharply to 2.2 within a period of two years. This was less than the 3 month norm but the trend, which has continued, was upward. The APM government benefited from the drastic and politically unpopular measures which Joyce Banda implemented and in terms of macroeconomic policies, the current regime still continues Joyce Banda’s policies.
Such policies are often associated with low levels of investment and growth and an accumulation of foreign exchange.
What Mutharika can be proud of is that his government has managed without much donor aid.
What Mutharika can be proud of is that his government has managed without much donor aid.
No comments:
Post a Comment