Reserve Bank of Malawi (RBM) Governor Charles Chuka has asked Malawians to demand fiscal discipline from their government if the next half century is to be better than the last.
The call comes at a time government has reduced borrowing from RBM, but continues to borrow from the private sector through treasury bills (T-bills) and issuance of bonds to finance its operations.
Speaking during an economic symposium organised to commemorate 50th anniversary of RBM in Lilongwe on Monday, Chuka said the next 50 years can only be better than the last if macro-economic stability is achieved and sustained.
He said: “If we are to achieve macro-economic stability basically defined as low and stable inflation, we the people must demand of our governments to spend on us only what we have given them in form of taxes.
“We must demand low and stable inflation. When our parliamentarians ask for a bridge in our constituency, they also must know that we are not asking them to print money or to borrow without prudence.”
Chuka said despite the task of taming inflation—currently at 24.7 percent as of October 2015—given to the RBM, it has proven to be difficult, hence the celebrations being rather muted.
He said: “How can we celebrate in song and dance when prices for basic commodities keep on rising and when interest rates are as high as 42 percent?”
Chuka said during the last 50 years, successes and failures with regard to inflation trends are almost entirely attributed to fiscal prudence or lack of it.
“It was and still isassumed today that governments cannot afford to undermine their own electability by pursuing fiscal adventurism. It is in the interest of governments to avoid giving central banks an excuse for failure to achieve low and stable inflation,” he said.
Minister of Finance, Economic Planning and Development Goodall Gondwe said despite some challenges, RBM has remained an epitome of discipline which other institutions must emulate if the country is to move forward.
The minister, who joined RBM after graduating from college in his 20s, said there have been occasions when he has had arguments with the governor on resources as a politician, “but at the end of the day the governor wins because he gives us sound advice.”