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| Business |
| Ecama dates Jumbe |
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by
Ayam Maeresa, 02 April 2003
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The Economics Association of Malawi (Ecama) has invited Finance Minister Friday Jumbe to a soul-searching public town talk on Saturday to highlight the debate on whether the country can achieve economic growth without budgetary support from international donors.
Ecama said in a press statement on Monday Louis Chimango, who is chairman of the Budget and Finance Committee of Parliament, will be the main discussant at the meeting.
Chimango is the country’s longest serving finance minister and faced the same music when the donors cut aid lines in the early 1990s.
“The topic of discussion is of current interest at a time when Malawi is no longer receiving any balance of payments (BOP) support from the International Monetary Fund [IMF] and from all bilateral donors,” said Ecama.
The association said the gathering will be interested with the minister’s explanation on why government approved 2001/02 fiscal budget estimates, whose total grants — BOP support, project financing and debt relief from Highly Indebted Poor Countries (Hipc) initiative — were K15.8 billion, but only saw K9.3 billion actual inflows.
Though project financing was on target, BOP support was short by a wide margin of K5.3 billion while Hipc debt relief was K1 billion less than estimated by government, said Ecama.
Ecama said the gathering will also want to know why the 2002/03 fiscal budget was drawn on such assumptions as to include grants of K16 billion when the reasons for the suspension of aid by international donors have not yet been resolved.
Said Ecama: “What is it that Malawi government has to do to convince donors to resume the disbursement of BOP support to Malawi. Are the conditionalities too hard for the Malawi government?”
The association said the forum will also be interested to hear what government is doing to reduce dependency on foreign financing of the budget. About 80 percent of the country’s development budget and 37 percent of government operations depend on external financing.
Ecama wondered why the Malawi Poverty Reduction Strategy resource package for the financial years 2003/04 and 2004/05 does not offer an exit measure from the dependency on grants.
Other mind boggling questions Jumbe will have to address are why the suspension of aid by the IMF has prompted a similar reaction from the bilateral donors and whether it was true that donors were opting to honour project support directly to the implementing agencies, cutting out central government.
Ecama said the forum will want to find out the solutions on why the ratio of domestic revenue to Gross Domestic Product — total value of goods and services produced in the country — is on a gradual decrease when the Malawi Revenue Authority (MRA) is doing its utmost to enhance their capacity.
The economy contracted by 1.8 percent last year, hit by a two-year economic recession that sunk industrial output by 13 percent, which the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) described as the lowest level ever.
As government has stepped up public borrowing through Treasury bills (TBs) to more than a billion kwacha per auction to patch up gaps in treasury, interest rates have remained high at 40 percent.
Last month the then Department of Economic Planning and Development (DEP&D;), formerly National Economic Council (Nec), said poor macroeconomic performance, coupled by a slowdown in the rest of the world and lack of competitiveness on the part of the industry are among other factors have led to contractions in the economy.
The department, which has come up with a growth strategy that seeks to attain a six percent growth, also cited weak legal and regulatory frameworks, poor infrastructure and dialogue between private sector and government as some of the constraints.
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