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Jumbe admits pressure
By
Ayam Maeresa - 12-05-2003 |
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Finance Minister Friday Jumbe said on Saturday he was under pressure to sort out the rot in the economy in the absence of donor aid and asked for people’s help to fight for a better life.
Jumbe was speaking in Blantyre during a town talk organised by the Economics Association of Malawi (Ecama) on whether the country could attain growth without donor aid.
“If survival means living, then we shall survive but if it means living in good standards then no (because) we are in a catch 22,” Jumbe said.
He said he needed support from every concerned citizen in his effort to make the volatile economy stable because that is the root cause of the country’s problems.
Plagued by high interest rates that have remained above 40 percent in almost two years of no donor aid for budgetary support, that economic analysts say has increased the cost of doing business, the economy has cut national growth to a negative 1.8 percent.
Industrial experts say more than 30 private companies have closed shop after failing to withstand the heat, while output has fallen by a record 13 percent.
“Macroeconomic instability is the kingpin of all our problems,” Jumbe said, “If we sort that out even the IMF (International Monetary Fund) will be happy and we will have inflows of donor support.”
Donors fund about 80 percent of the country’s development budget and 40 percent government’s internal operations.
He said coming from an autocractic rule the country largely suffers from both economic and political pressures.
Said Jumbe: “You can’t run away from the economics that impinge on politics or politics that impinge on economics.”
Faced by little resources, Jumbe said government was findings it hard to implement development programmes such as the Vision 2020--that seeks to move the country to a middle income group--and UN Popular Millennium Goals, which aim to halve poverty by the year 2015.
But to meet these goals, government needs to raise nearly K546 billion (US$6 billion), he said.
He said the Poverty Reduction Strategy Paper (PRSP), a priority poverty reduction and growth plan, might face the same problems. “It’s a tall order to do that,” said Jumbe.
But some economists said government has itself to blame for miseries. “People are already experiencing belt tightening through high taxes and interest rates but we don’t see that happening on the political front...Just what is wrong with our politicians?” said one economist.
But Jumbe said government cut down on spending this year but was hit by the food crisis that needed an extra K7.2 billion (US$80 million) and ghost workers in civil service who bloated the wage bill.
IMF country representative Girma Begashaw said government has signed an agreement to be monitored until June this year. He said the fund’s board might meet to discuss the issue of a programme by August.
“The whole of 2001 there was no fiscal discipline,” said Begashaw.
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