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‘Malawi’s economic plan needs coordination among ministries’

The 2012/13 budget key objective is to restore macroeconomic balance and a market-based economy that will provide the foundation for sustainable economic growth, according to Finance Minister Ken Lipenga.

The financial plan is expected to consolidate the ‘bold’ economic reforms that the Malawi Government has implemented since President Joyce Banda took over the leadership of the country on April 7 2012, following the death of her predecessor Bingu wa Mutharika.

 Some of the key reforms, under the banner of Economic Recovery Plan (ERP), include liberalising Malawi’s foreign exchange regime and the removal of price controls on fuel and utilities, a necessary evil to enable Malawi to move to a market based economy and to reduce the burden of subsidies on the budget.

 Other key anchors include the No Net Domestic Financing, careful expenditure control and prioritisation together with the implementation of reforms to strengthen governance systems for public financial management.

 The Malawi Government last year launched the ERP to re-establish appropriate conditions for sustainable economic growth and job creation, one of the results of the plan were the successful negotiations with the International Monetary Fund (IMF) to support the recovery program.

 It is under the ERP that government is implementing an austerity budget; government concedes that some of the reforms will be painful.

 “But we have been living beyond our means and have to take the difficult decisions that are necessary to stabilise the economy. This will lay the foundation for sustainable economic growth in future,” said Lipenga when presenting the 2012/13 budget.

 It is now three months away to clock one year since government has been implementing the ERP.

 Newly appointed Minister of Economic Planning and Development (EP&D) Ralph Jooma told Business News that if ERP is to work successfully, all the ministries directly tasked to see its implementation must work closely together and be accountable.

 He said the ERP has good plans for the country, but was worried with the coordination among the ministries and the EP&D remains challenged due to insufficient resources.

 “I have noted that the strategic ministries involved in making the ERP a success were not coordinating very well with my ministry. Having taken over this position, I will make sure that we meet regularly to see where we are having challenges and where we are doing well,” said Jooma.

 Some of the ministries directly tasked with the ERP implementation include: Tourism Wildlife and Culture, Energy and Mining, Agriculture, Information and Civic Education as well as Industry and Trade.

Jooma is optimistic that the economy will rebound sooner than later as the country continues to produce for export market, adding that the country’s produce will be sold in a manner that will ensure   that all the foreign exchange proceeds find their way into Malawi.

 “As government, we are optimistic that we have taken correct steps in producing for export which is a prerequisite for our economy to rebound. In fact, the way we should dispose of this year’s produce should be in such a way that our farmers are encouraged to produce more to increase export revenue,” he said, citing tobacco sales which bring in more than half of the country’s foreign exchange earnings.

  But Jooma complained that government sometimes fails to actualise its plans because of a thin resource envelope and lack of capacity in other ministries.

 “Some ministries fail to implement well planned projects due to lack of capacity to absorb the allocated resources and this frustrates the larger government agenda.

 “The most worrisome thing for me over the years has been seeing allocations meant for development projects getting reversed in the middle of the year on account of intimated failure usage by a line ministry,” he said.

Jooma observed that there is need to improve on the efficiency in the way government spends public resources.

 He said the EP&D ministry will take a lead in the monitoring and evaluation exercise on the same.

 Last week, World Bank country manager Sandra Bloemkamp called on the government to improve internal controls, accounting, reporting and oversight of fighting finances.

 “Better oversight and management of funds means that more resources will be available for good use across government programmes,” she said.

 Late last year, government in a statement outlining the achievement under the ERP noted the state of the economy as of end April, 2012 was ‘so precarious’ that continuation of the then economic policies was bound to push the country over a precipice from which it would have been painful to pull ourselves from.

 Government said that deepening shortages of essential imports including fuel, fertilisers, medicines, among others, would have forestalled any hope for economic recovery in the medium-term.

 It said the resulting sharp contraction in output would have resulted not just in job loss and incomes, but also in reduced tax revenues, forcing the government to either print money to temporarily sustain public services or undertake a substantial cut in those public expenditures.

 But it remains to be seen if the ERP is bearing fruits because most Malawians are failing to make ends meet largely due to the escalating cost of living occasioned by galloping inflation rate, now at 35.1 percent and high bank lending rates, among others.

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