Chakwera Outlines Stringent Measures for Revitalizing Malawi’s Economy and Healthcare

President Dr. Lazarus Chakwera on Wednesday evening spelt out tough measures in what he termed as a direction his administration has taken to heal the economy.

In his national address aired on state broadcaster, Malawi Broadcasting Corporation, Chakwera said he has made painful corrections in fulfilment of the promise and pledge he made to Malawians when he was being inaugurated by President on the Independence Day in 2020.

He said he was aware of the repercussions and deliberate misrepresentation of facts the opposition would want to advance in their desperate move to gain political mileage.

“At my inauguration on Independence Day three years ago, I carried in my heart the heavy burden of knowing that you had trusted me to correct the mistakes in economic management I had inherited. At that moment, I knew that I had the choice of either telling you the truth about how bad things were or continuing the lies of the past that claimed that our economy was built on sound principles and practices,” he said.

“But I chose to tell you the truth that day, which is why I told you that the principles and practices our economy had been built on previously were so unsound like a dislocated bone that even correcting them to create economic liberation would cause enormous pain for all of you.

“That pain I spoke of is the pain we are all feeling now, and that pain is going to continue for the next few months as we complete the process of putting the dislocated bones back into place. But once this short painful season of sowing ends, I assure you that a season of joyful harvest will come,” he added.

Earlier in his address, President Chakwera announced that the Board of the International Monetary Fund (IMF) has resumed its direct budgetary support to Malawi with an approval of the Extended Credit Facility (ECF) amounting to US$174 million.

IMF stopped providing direct budgetary aid to Malawi during the Democratic Progress Party (DPP) administration, under the leadership of former president Professor Arthur Peter Mutharika, over what it termed as “misreporting and misrepresentation of figures by the Reserve Bank of Malawi (RBM) under the governorship of Dr. Dalitso Kabambe.

The incumbent administration has been negotiating for the resumption of direct budgetary support for the past two years.

President Chakwera disclosed that the resumption of direct budget support by the IMF also means direct support from international partners after a 10-year absence because of the cash-gate and the financial mismanagement of the previous administration.

“The benefits of this IMF Program are many, but allow me to mention a few critical ones. First, the IMF approval will unlock foreign direct investments into the country to strengthen productivity.

“For example, as a result of our qualification for this IMF Program, several development partners have already lined up a number of financial facilities that will boost the supply of foreign exchange in our banks. This includes the World Bank’s US$60 million Trade Finance Facility that will assist domestic banks to support importation of strategic commodities like fertilizer, pharmaceuticals and industrial raw materials,” he said.

President Chakwera further disclosed that World Bank’s 217 million dollar package in response to the fiscal reforms Malawi has implemented is also on its way, saying one third of this will be made available immediately.

He said this includes USD250 million from the World Bank for the Agricultural Commercialization Project, which he will be launching tomorrow in Ntchisi.

“From this, USD30 million has been set aside for the procurement and distribution of Maize to address the threat of hunger that is looming over several parts of the country.

“It also includes our ability to meet all the requirements for 70 million Euros in budget support from the European Union, 30 million dollars in budget support from the African Development Bank, and 6 million dollars in support from the International Fund for Agricultural Development.

“These injections of foreign investment from our partners over the next four months will greatly enhance our foreign exchange reserves position and provide the macroeconomic stability needed for economic and business growth,” he said.

But President Chakwera stressed that the achievement will not make his administration relax. He said he will lead by example by, among others, cancelling international trips between now and the end of the fiscal year, beginning with my trip to COP28 at the end of this month.

He also announced that he has put a freeze on all public-funded international trips for all public officers at all levels, including those in parastatals, until the end of the financial year in March.

“In fact, all Cabinet members currently abroad on public-funded trips must return to Malawi with immediate effect. Any travel deemed absolutely necessary by anyone during that period must be submitted to my office for my personal authorization,” he said.

“Secondly, I order that all fuel entitlements for Cabinet Ministers, Principal Secretaries, Directors and all Members of Senior Management of Public Institutions should be cut in half with immediate effect.

Thirdly, until further notice, I order the Secretary to the President and Cabinet to circulate to all public institutions a criteria for local trainings and local travel that will be acceptable, as well as a cap on how much of their budgets can be spent on allowances for such trainings and trips. By doing this, I am effectively ending the practice of draining public coffers to spend on allowances for useless activities.”

President Chakwera also directed the Minister of Finance and Economic Affairs to include provisions in the upcoming midyear budget review for cushioning Small to Medium Enterprises so that we can protect the jobs that they create.

He has also ordered the Minister of Finance to also include in that mid-year budget review provisions for a reasonable wage increase for civil servants.

“In the meantime, I have also directed him to review the Pay As You Earn income tax and incorporate a reduced percentage in the new budget he presents to Parliament in a few months so that workers whose incomes have lost value in the devaluation are helped with a lower tax burden.

“In the meantime, to protect Malawians from the predatory behaviours of those who want to exploit consumers in the wake of the devaluation, I have tasked the Ministers of Finance and Trade to work together with the Competition and Fair-Trading Commission to investigate all price increases for any sign of unfair business practices and to give me a weekly report on the culprits we need to hold accountable for raising prices in violation of the law.

“Similarly, I have ordered the Secretary to the President and Cabinet to see to it that the recent hiking of the price of water by Waterboards is absorbed by the operating costs of those boards for now, and not placed on Malawian consumers.

“Most importantly, the savings we will make from these and other spending cuts will go towards the procurement of food and fertilizer to ensure that no Malawian family in any district is left without food in the next four months while we plant our fields,” he said.

Meanwhile, President Chakwera has warned those in positions of leadership and who know that they are responsible for creating the mess Malawians are in that he would deal with them.

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