DPP must own its mistakes
Honourable Folks, I get cheesed when the people who put us in economic quandary, destroying a buoyant, albeit fragile, economy that registered a steady growth rate of over seven percent in under one year of senseless zero-deficit budget turn around and blame others for the high price taxpayers, who include voters, are paying for their mistake.
Democratic Progressive Party (DPP) reaction to the 2012/13 national budget is nothing much more than an attack that the Joyce Banda administration is bending towards pleasing the International Monetary Fund (IMF) at the expense of poor Malawians.
Basically, the concern is premised on the bold measures the government has taken to devalue the kwacha by a whopping 49 percent and relax the regulatory role of the central bank in the buying and selling of foreign currency.
These measures have resulted in the soaring of inflation, particularly of non-food items, to over 12 percent and it is estimated that the situation will get worse before it gets better. DPP rightly argues that this is hurting Malawians in rural areas.
Coupled with the fact that economic growth has slackened with estimates indicating it will not be anywhere near the 6 percent minimum for poverty reduction in the next two years, DPP should also be concerned that many people who had just gone out of the web of abject poverty (defined as living on less than a dollar (K270) a day, will trip back and remain there by the time of the tripartite elections in 2014.
Of course, it is prudent to expect that the majority of these people will want to punish politicians who pushed them into the poverty pit by denying them their votes. By blaming the Banda administration for the aftermath of the huge devaluation, I believe DPP has already started political posturing.
The party wants Malawians to believe the “political engineer” (may his soul rest in peace) was right to say no to devaluation. The party wants to make Malawians believe Mutharika had a point by derailing programmes with IMF, Common Approach to Budgetary Support (Cabs), US government’s Millennium Challenge Corporation, etc.
But this is political baloney only idiots can buy. The value of a currency is as good as the value of the commodities it backs, not the politics of the day. Malawi has a very narrow and undiversified export base. Why would any reasonable person throw away the dollar, euro or pound sterling for something that is not their money’s worth?
Apart from the former president himself and few of his cronies who feared devaluation would trigger political instability thereby threatening their basking in the comfort zone, the debate among technocrats in government was not whether or not to devalue.
Devaluation was inevitable. Rather, the debate was on how to carry out the devaluation. Technocrats long accepted the kwacha was overvalued by up to 50 percent. Why? The DPP government, and particularly its leadership, wanted to make us believe it had the magic wand to perform economic miracles and make us enjoy the nirvana experience.
I guess that was all the more necessary in the late president’s larger plot to bend democratic corners and hand us over to his younger brother, Peter, in 2014. One must be very cunning to hoodwink voters into thinking: “There must be more of these goodies in the family where they are coming from”.
But now we know that the DPP’s economic blueprint was a pack of lies. The zero-budget deficit adopted after donors and investors lost confidence in the economy did not work and MRA and other agents of the state were being told to borrow from the banks secretly, if not illegally, to fill yawning potholes in domestic revenue collections.
That not withstanding, by the end of the day, there was still a K70.05 billion fiscal deficit—described by Minister of Finance Ken Lipenga as “the largest in recent history”—for us the voters to pay. In addition, confidence in the economy was so low that IMF rejected the suggestion to devalue the kwacha in phases. There was a need to take drastic measures to prove to our “development partners” that we are serious about salvaging our derailed economy.
Now because of the devaluation, donor aid tap is open and forex shortages are easing. For a while, we have not spent nights at filling stations, let alone buy fuel in zigubu. Businesses can at least look to their banks—not Reserve Bank which the Executive with its political machinations could not leave alone—for forex with which to buy raw materials, machinery and spare parts.
What we are experiencing now is the excruciating pain that comes as puss is being pressed out of the boil. It is followed by the healing process. In this scenario DPP would better own up its mistakes and the debate should be on what else can be done to supplement the safety nets for the sake of the poorest in our midst.
Another issue to debate on is what must be done to ensure the madness that put us in this mess that does rear is ugly face again. But to blame others for the pain they caused us is a sure way of losing my vote in 2014.