New Finance Minister tipped on direction
Economists have advised newly-appointed Minister of Finance and Economic Affairs Simplex Chithyola Banda to make hard decisions, including making reforms operational and cutting down expenditure to put the economy back on track.
The sentiments follow a mini Cabinet reshuffle President Lazarus Chakwera made on Saturday evening which saw Chithyola Banda, formerly minister of Industry and Trade, swapping posts with Sostein Gwengwe.
Speaking in an interview yesterday, former University of Malawi economics lecturer Exley Silumbu said Chithyola Banda has taken up the role when the country’s economy is in bad shape and needs serious attention.
He said: “There are a lot of imbalances in the economy which need to be closed soon. We have the foreign exchange challenge which we believe he is familiar with as he is coming from the Ministry of Trade whose other core function is to work with the private sector to boost production.
“The transition is also coming at a time when we are supposed to complete the macroeconomic deal with the International Monetary Fund [IMF] which everyone is keen to see as a positive outcome.”
Silumbu said the new Minister of Finance needs to ensure that there is adequate revenue and expenditure rationalisation to ensure that the fiscal deficit is brought down and reaches the appropriate limit and public debt reaches sustainable levels.
Economist Bond Mtembezeka, in a separate interview, said the new minister needs to urgently manage and rein in government debt by optimising expenditure and growing the resource envelope.
“The new minister ought to ensure the country stabilises inflation and quickly bring about a disinflation but also support Affordable Inputs Programme [AIP] efforts quickly as non-performance again will be very disastrous,” he said.
Mtembezeka also observed that the IMF’s Extended Credit Facility (ECF) comes with conditions, as such, the minister needs to show commitment towards the agreed terms to achieve a positive conclusion.
Chithyola Banda has taken the mantle at a time Malawi has passed the first test as the global lender has reached a staff-level agreement on the second and last review of the Staff Monitored Programme with Executive Board Involvement.
The agreement, which will see Malawi getting $174 million (about K195 billion) under a new 48-month financing arrangement under the ECF, is, however, subject to IMF management and executive board approval and receipt of the necessary financing assurances.
