President Peter Mutharika Says Joyce Banda Left ‘Tattered Economy’

Malawin President Peter Mutharika has told London-based New African magazine that he inherited a “tattered and bankrupt economy” four years ago from his predecessor, Joyce Banda and he has been engaged in repairing the damage, saying so far he is leading the nation on a path of sustainable growth.

Mutharika who is seeking a second five-year term in next year;s watershed elections, said he expects to get a “landslide victory” that will give his government “themandate to finish all the work we are putting in place for Malawi to exce.”

In an interview with Zambian journalist reGina Jane Jere during the Commonwealth Heads of Government Meeting in London recently which has been published in the latest June edition, Mutharika prides himself for reversing many of the economic woes and is setting Malawi to better horizons.

“My government came into power just after the former President’s [Joyce Banda] cashgate. When we came in, there was absolutely no money. The country was literally bankrupt. The deficit the previous government left was as huge as the national budget; the arrears were in billions, both local and international. To top it all, donors who were providing 40% of our budget left us,” Mutharika said in quotes reported by New African magazine.

Mutharika said he prioritised fixing a ‘tattered economy’ and winning back donor confidence, but noted that this has been compounded further by natural calamities that beset the country as soon as he took office.

“Just after six months in office, we had the worst floods Malawi has ever experienced. A third of the country was completely swept away, and we had to divert the little resources we had to rebuilding the affected regions, and resettling people.

“But as if that was not enough,” he reflects, “a year later we had famine – the worst ever in the country’s history – and it ran for two consecutive years. We became completely food-insecure, and we had to find ways of feeding over 4.5m people who were food-insecure,” he laments in the interview.

“I promised people in those difficult times that nobody was going to die of hunger. We worked extremely hard and we managed to contain the famine, and now this year, things are much better, although we may still have a deficit of maybe 30%,” he adds as the magazine quotes him.

According to Mutharika, when he took power from Joyce Banda, he found only one month’s worth of import cover – the lowest in the history of Malawi.

“Now we have six months of import cover, the highest in history. We now have over $1bn in reserve – $600m official reserves and $400m private.”

He pointed out that inflation, which had been running at 37%, has now been beaten down to single digit of only 7.8%; interest rates of about 40% have been brought down to 16% policy rate and about 21% commercial rate.

“Of course I would still like these figures to go further down, that is the aim. But we are still much better off than where we began. And during this time, the kwacha has been stable for over two years, and I have not raised the price of petrol for two years too – something that has never happened before.”

Mutharika told the magazine that his administration had set targets on how to rebuild the economy.

“One of the major decisions I took was to cut down on spending: one way to do so was to cut back on ministers travelling abroad for meetings. I myself do not travel; the last time I did [before the CHOGM] was to attend the UN General Assembly in New York last September.

“I also decided to have a lean Cabinet – reducing it from a Cabinet of 30-40 people to only 18 ministers, 20 if you include the President and Vice-President. By doing so we have managed to save large amounts.”

He expands on the subject: “Even unnecessary internal travel has been cut back. For example, if I am visiting a project, not everyone has to travel with me, unless they are a line minister. For example if I am launching an agriculture project, only the Minister of Agriculture has to come, we do not need the Minister of Labour to come too, or the Minister of Foreign Affairs or Education.

“Through these cut-backs and prudent spending, we have managed to finance our budget ourselves. This year for example, 90% of our budget is being funded from our own domestic resources. We are not getting donor support to fund our budget.”

He says the economy has now stabilised, and is beginning to grow.

“When we came in, it was growing at 2.7%, and although we still have to have the final figures, this year the economy is expected to grow at around 4 to 5.5%,” he says. “I am hoping that in a year or two, we should be able to grow at 7 to 7.5%. So yes, the economy is beginning to improve and this has taken discipline and a strict and tight monetary policy. The opposition of course may not agree, but the truth of the matter is that these are facts, and we can prove them.”

New African report states that the prudent fiscal measures appear to have also warmed the hearts of the donor community, who have since returned to Malawi. In April, the IMF approved a new three-year Extended Credit Facility for Malawi to the tune of $112.3m.

The Fund’s Deputy Managing Director, Tao Zhang has given Malawi the thumbs up, but with a note of caution: “Malawi has shown progress in achieving macroeconomic stabilisation following two years of drought, with a rebound in growth and inflation reduced to single digits… However, the fiscal position has deteriorated and the public debt to GDP ratio has risen… The authorities are [however] making efforts to entrench macroeconomic stability, raise growth and reduce poverty.”

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Source: Nyasa Times

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