Hon Folks, ever heard about Reaganomics? Americans coined the term after being bamboozled by economic policies of President Ronald Reagan (1981-89).
Now the American English lexicon is one word richer only because Reaganomics led to the tripling of the US national debt in the eight years Reagan was at the White House.
Thanks to Reaganomics, America which used to be the largest creditor, became and still is, the largest debtor currently owing China and other lenders a whopping $20.4 trillion! Don’t try to convert the figure into Malawi kwacha. It’s unfathomable!
The good thing for the US is that no creditor can walk out on it. It’s the world’s largest economy! Fancy, despite the humongous debt, it can even afford—as it has done on the watch of Donald Trump—to slash off big time taxes. Where else can that happen?
I don’t know if the Mutharika brothers—the late Bingu and his younger brother Peter—once sat under Reagan but their economic policies, like Reaganomics, have sank Malawi up to the neck in debts. In fact it’s a yoke that will weigh down on the tender necks of our innocent children and their children as well.
Which is why, it’s appropriate I guess, to coin a term for their economic policies which have already pushed public debts to an unenviable K2.5 trillion? Also consider that only in 2006, our external debts were almost wiped off the slate yet today they are already at K1.4 trillion and accumulating!
Tchopanomics! Yeah, a term derived from the popular dance of the Lhomwe, a tribal grouping which Bingu founded and Peter consolidated by appointing Ngolongoliwa as its paramount Chief (Mwene-wa-mamwene).
Tchopanomics is steeped in a strong sense of economic emancipation which made Bingu mess up old-established relations with western donors early in his short second term (2009-12).
He claimed western aid, unlike Chinese aid which came without strings attached, was a mere tool for neo-colonialism, and was convinced that by adopting a zero-deficit budget, Malawi could manage just fine without their aid.
Some economists bought into Bingu’s thinking, arguing like students looking at the real world through a classroom window that trade, not aid, is what can develop Malawi.
It’s as if we didn’t know that! The issue was how an undiversified landlocked economy dependent on tobacco, could suddenly bank on trading with the world on goods and services. The take-off for such a switch could only be gradual considering that at the time aid was filling in the national budget a deficit of 80 percent on the development side and up to 40 per cent of the recurrent side.
Predictably, the zero-deficit budget didn’t attract foreign investors and there was no trade and no foreign exchange. The economy tanked and we’re yet to recover.
When APM assumed power in 2014, he picked up from where his brother stopped, boasting without evidence that we are managing just fine without budgetary support.
How so when the civil service has so many vacancies in key sectors—education, health, agriculture—and yet government is failing to fill the gaps even where a lot of money has already been spent training the potential employees?
Again, government has increased the tax rate, broadened the tax base and reinvigorated by law MRA’s collection muscle yet it’s failing to meet, let alone beat, its revenue targets. What next?
Interestingly, APM has a litany of 2018 pledges— from purchasing an air ambulance to constructing state-of-the-art military hospital, technical colleges in all districts, football stadiums and of course, many, many roads. There’s also talk about increasing allocation for the malata and cement programme by K3 billion!
So where will the money come from? Debts and more debts, of course!
Finance Minister Goodall Gondwe is talking about slashing the budget by K30 billion. I’m sceptical this will come from areas of wasteful spending. If anything, the cut will most likely be on food for patients in public hospital or inmates in prisons. They’ll also be on drugs, books, police operations, etc.
Sounds familiar? It’s Tchopanomics, stupid!