Will MPs dance on economy’s tomb?

Honourable Folks, as representatives of the people in Parliament are mulling over the mid-year budget report of Finance Minister Ken Lipenga, there just might be the temptation to sit on the fence and play safe by singing empty songs of praise for President Bingu wa Mutharika’s leadership.

Speaker Chimunthu Banda and his fellow MPs should be reminded that if some bad laws have gone back to the Law Commission for review, it is because lawmakers—the majority of whom belong to DPP—passed them to please the President without much regard to the constitutionality of such laws.

Although at the end of the day it is the Mutharika administration that bears the flak, this Parliament will go down in history as the first to face such humiliation, a clear sign of failure by the Legislature to provide checks and balances over the Executive.

To describe the zero-deficit budget as a success—as Mutharika did last Friday—based on the claim that government has so far raised K4.5 billion more than the target of K15.6 billion in domestic revenue while it has also spent K7.6 billion less than the target of K127.3 billion, is to deliberately ignore the key question: at what price?

MPs know better than the President whether public hospitals have drugs, public schools have desks, chairs, books and chalk; and whether the road construction projects in various parts of the country have delayed or even stalled outright.

As the President put it last Friday, beneficiaries of goods and services that government provides are people in rural areas where 80 percent of the population lives. These depend on government more than town folks who can go to private hospitals and send their children to private schools.

The question to be asked is: Has the increased domestic revenue government claims to have collected translated into better service delivery? Is there more development now than in the past?

But whether MPs choose to ignore the suffering of the people as a result of the zero-deficit budget, they cannot ignore the other thorny issue of whether to devalue the kwacha, lest they end up dancing a partisan political dance on the grave of our economy.

If I heard the language of reason from government and the Reserve Bank right, the question was not to devalue or not to devalue. Both the IMF and the experts who represented Malawi saw the need to devalue by 40 percent or more.

Rather, the question was how. IMF was of the view that the devaluation, like the amputation of a cancerous leg, should be done at once so that the healing can commence immediately.

Our delegates were of the view that the devaluation be done gradually in phases. What does not make sense is Mutharika’s position that there should be no devaluation when in fact the kwacha has already lost its value on the parallel market where foreign exchange is available somewhat.

Equally puzzling is Mutharika’s appeal to IMF and other donors to give his government three years “to put in place policies that will restore resilience in our external balances.” Just how does this request, even if it was granted, help address the immediate challenge of forex shortage?

By the way, will Mutharika’s government still be there three years from now?

When addressing this issue, MPs should realise that now, probably more than ever before, the industry is what we can look to as the engine of our economic growth.

Yet, while government is treating the forex shortage much the same way as it has treated the Judiciary sit-in and academic freedom saga by simply looking the other way, companies are scaling down or closing altogether largely because of lack of forex for the purchase of spare parts and raw materials.

In other words, government’s policy is choking the goose that lays the eggs. This is happening when tobacco and tea—major cash crops—are not doing as well as expected.

Now the reality is: where will the winning formula for the zero-deficit budget come from if donor aid, revenue from industry and revenue from cash crops continue to dwindle? Put differently, what will become of Mutharika’s responsibilities for the rural folks, if all major sources of government revenue dry up?

Or does the DPP have it on its agenda to set up a government that embarked on wealth generation? My simple advice here is that even Cuba is waking up to the fact that such a task is best done by the private sector.