A development State such as Malawi is directed by triumvirate consisting of the head of government who may be a president or prime minister.
The President is responsible for the overall economic policy and outcomes. On her right hand, sits the minister of Finance who is responsible for fiscal policy.
On the left, sits the governor of the central bank who is responsible for monetary policy. If the two deputies know their jobs and are allowed discretion so much the better for the economy.
The Daily Times of Friday, September 14 2012 carried a story in which Reserve Bank of Malawi Governor Charles Chuka warned on wage increases.
How satisfying to read remarks on the economy by someone who has mastered macro-economics. Some people or institutions take on the role of the voice of the voiceless without realising that sometimes the road to paradise is paved with good intentions.
We hope those who were demanding astronomical pay rises have revised their stakes and accepted compromise. Let us hope that where disputes are not yet sorted out, the outcome will be equally reasonable.
If the demands being made on the economy are not bridled, Malawi could once more become a highly indebted poorest country without any rescuer in sight.
A wise nation studies the methods adopted by others that have pulled themselves out of the abyss of poverty. Such a nation tries to understand why other countries have entangled themselves in economic hardships and sovereign debts.
Professor Charles W.L. Hill of University of Washington in his book International Business explains how Greece, the mother of European civilisation found itself into the present unhappy situation.
â€œThe financial crises had its roots in a decade of free spending by the Greek Government which ran up a high level of debt to finance extensive spending in the public sector. Much of the spending increase could be characterised as an attempt by the government to buy off powerful interest groups in Greek society, from teachers to farmers to public sector employees rewarding them with high pay and extensive benefits.
â€œTo make matters worse, the government misled the international community about the level of its indebtedness.
â€œIn October 2009, a new government took power and quickly announced that the 2009 public sector deficit which had been projected to be around five percent would actually be 12.7 percent. The previous government had apparently been cooking the books.â€
We note that the attempt to appease powerful interest groups is what eventually led to the insolvency and bankruptcy of the Greek economy. Are we talking of signs of the time? They are there indeed within the Malawi economy? Members of certain groups can launch strikes without forfeiting their pay for the days they are not working. This is indiscipline.
Professor Hill continues: â€œIn May 2010, the Euro zone countries led by Germany along with the International Monetary Fund (IMF) agreed to lend up to 110 billion eurosâ€¦in exchange the Greek Government agreed to implement a series of strict austerity measures. These included tax increases, major cuts in public sector pay, reduction in benefits enjoyed by public sector employees. For example, the retirement age was increased to 65 from 61 and limits were placed on pension and reduction in the number of public sector employees.â€
In Malawi, some non-governmental organisations and individuals are trying to turn Malawians into a nation of spoilt children by continuously forcing government to cushion the effects of devaluation. They want to gain popularity by making people believe that we can turn around our economy without pain. This is unrealistic.
They are mistaken to suggest that the economic problems are entirely the fault of government, both present and preceding, and that the remedy lies with government only.
Actually, cooperative efforts between the private and public sectors are necessary. On the part of the private sector, there should be realisation that there are no shortcuts to high standards of living, gain comes after pain, sweet after sweat.
On the public sector side, it must be realised that those who ask others to endure temporary hardships should demonstrate good examples. There was no justification increasing perks for ministers and members of Parliament when the economy is suffering from stagnation.
To Madam President, I would say set up a council of economic advisers which should include foreigners.