We have all been hooked to the idea that IMF is an institution that provides policy advice and financing to members in economic difficulties. In this regard, the organisation is well known for working with developing nations to help them achieve macroeconomic stability and reduce poverty. IMF has other roles. But my interest today is more about IMF’s modus operandi in how the organisation fulfills its policy’s advisory role than on its prescribed mandates.
This week, IMF expressed concern with the Tonse Alliance administration’s implementation of the Affordable Inputs Programme (AIP) as well as the adjustment of the zero-tax bracket from K45 000 to K100 000.
The Breton Woods group’s concern is that the programme which will see 4.2 million households accessing subsidized inputs is wrongly premised on what it describes as a narrow focus on maize alone. IMF has since described the focus on maize as retrogressive and that the programme will disproportionately benefit the wealthy.
IMF argues in its latest Rapid Credit Facility (RCF) Report on Malawi that it has since proposed reforms to enhance the programme’s efficiency and effectiveness. In the same report, IMF has also criticized implementation of the doubled zero-tax rated bracket from K45 000 to K100 000.
The timing of the release of IMF’s position on the two issues, raises the question, how IMF operates as an advisory body? It gives the impression IMF is more reactionary than proactive? A good question one may ask is why did IMF wait for Government to roll out the K162 billion input programme before presenting its position to government?
After budget presentation in September, IMF was aware of the scope of the programme and how much resources Government had planned to pump into AIP whose target was maize production. Then there was a good two weeks before Parliament started debating the budget. This is the time IMF should have seriously engaged Capital Hill and other stakeholders to widen the scope of the crops to be covered under AIP. Such an intervention would have been better appreciated as it would have enabled all stakeholders to also plan better. Under AIP, farming households will each receive two 50 kilogrammes (kg) bags of fertilizer at K4 495 per bag and five kg certified seed at K2 000 per pack. But now it is too late. Nothing can change at this late moment. The changes IMF is suggesting can only be implemented in the next fiscal plan. Ad it is quite understandable for Government to say it will continue to review all its programmes to ensure efficiency.
While such is the case, the matter raises the question of how extensively government conducts its consultations with other organisations such as IMF, the World Bank and other development partners on key policy issues. As part of the budget preparation, Minister of Finance and his team go out on annual countrywide ritual of meeting various sectors for their input on the budget. The current Minister of Finance Felix Mlusu undertook this tour.
One would have thought the country’s development partners were among the sectors the minister consulted for their views. Such consultations would also have provided the Tonse Alliance an opportunity to receive sober, credible and impartial insights into key aspects of their manifestos from people who are apolitical and disinterested in local politics.
But with hindsight, it is just as well that the Tonse Administration went ahead to implement the two manifesto issues—AIP and the K100 000 zero-tax bracket. Political parties and their candidates have a duty to fulfill campaign promises they make with voters. Going forward, what is crucial for the Tonse administration is to ensure that it clears the hurdles that usually stand in the way of successful implementation of projects like AIP. K162 billion of the K245 billion allocation to the Ministry of Agriculture in the K2.2 trillion budget—which is a 78 percent increase from the K36 billion allocation in the terminated Fisp programme—is humongous. People expect results from this allocation. People will not forgive the Tonse Administration if all these resources go to waste. n