Secrecy puts ERP in jeopardy

Malawi Government is this Friday set to launch the long-awaited Economic Recovery Plan (ERP) that aims to restore external and internal economic stability, with donors and civil society expected to play a key role in its implementation.

But the UK’s Department for International Development (DfID) and civil society organisations (CSOs) have said it is difficult for them to help government in the absence of the actual plan on the table.

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) said on Tuesday they are in touch with government having seen snippets of the plan.

Minister of Economic Planning and Development Atupele Muluzi said in an interview on Wednesday the plan, expected to be launched by Vice-President Khumbo Kachali, proposes measures to cushion the vulnerable from the impact of any reforms, particularly the exchange rate policy.

He said private sector and non-State actors have roles to play in the ERP, explaining that financing arrangements for the plan are contained in the 2012/13 budget in the five priority sectors and what the donors are providing through parallel financing, budget support and on budget financing.

“The implementation of the ERP in the immediate and short-term is through the 2012/13 annual budget which was passed in Parliament. So, in effect, the implementation of the ERP began with implementation of the budget.

“The ERP’s purpose is to ramp up ongoing efforts in the annual budget and the MGDS [Malawi Growth and Development Strategy II) to stabilise the economy while cushioning Malawians from the unintended effects over the past few months,” said Muluzi.

The plan, which focuses on five pillars namely; energy, tourism, mining, agriculture and transport infrastructure and ICT, also proposes increasing resource allocation to areas that would address constraints to economic growth such as energy and to those aimed at boosting production for the export market.

He also said implementation of the plan largely depends on donors and cooperating partners for technical and financial support while CSOs and the private sector are expected to implement specific activities and provide oversight and accountability functions.

Plan not seen

But UK’s Department for International Development (DfID) and some CSOs said this week it is difficult for them to help government in the absence of the actual plan on the table. They claim they have not seen it.

“DfID supports Government of Malawi’s efforts to improve the economy, but the Economic Recovery Plan has not yet been published, so we are not in a position to comment on its contents,” said DfID’s programme manager Andrew Massa.

Human Rights Consultative Committee (HRCC) chairperson Undule Mwakasungula also said they have not seen the plan, arguing it is difficult for them to play their role in the implementation of the plan.

“As CSOs, we are ready to help government through the ERP and help our country get out of the current challenges,” said Mwakasungula.

He said if Malawians are being asked to tighten their belts, then government has to do the same by showing that it is suffering with the people and not enjoy in luxuries.

But the Malawi Confederation of Chambers of Commerce and Industry chief executive officer Chancellor Kaferapanjira said on Tuesday that they are in touch with government is respect of the ERP.

“In fact, government has just released a summary of what it is doing in this regard. Recovery is always slow but it has to be sure.

“The devaluation of the kwacha, which led to the availability of foreign exchange, is a major positive development. In our view, it is indeed working to kill off the demand which was created as a result of mispricing economic commodities, including foreign currencies,” he said.

Kaferapanjira noted that readjustment of prices on fuel, electricity and water, currency (devaluation and floatation), money (interest rates), are all meant to not only remove pressure from government budget, but also to discourage wanton usage of such commodities.

The ERP comes at a time when Malawians are feeling the pinch of market-based reforms championed by the International Monetary Fund (IMF) such as the devaluation and floatation of the kwacha, introduction of automatic pricing mechanic (APM) on fuel and removal of subsidy on electricity prices.

It also comes at a time inflation, as recorded in August, in hovering at 25.5 percent increasing the cost of living, liquidity squeeze and high lending rates hitting companies and individuals.

Click here to download the Economic Recovery Plan for Malawi document