The Malawi Government has announced it has abandoned the Economic Recovery Plan (ERP) which the Joyce Banda administration introduced two years ago to repair the country‚Äôs economy.
The decision has come as the blueprint, according to Minister of Finance and Economic Planning, Goodall Gondwe, has been tempered by the huge domestic borrowing that characterised the period it has been operational.
But some economic pundits have since expressed concern over the decision arguing that the government is treading dangerously by throwing away the strategy which they say has helped the country to achieve some tangible gains in the past two years.
However, in an interview on Saturday, Gondwe said despite the plan being implemented since 2012, domestic debt soared in that period, effectively eroding the intentions of the Economic Recovery Plan.
‚ÄúIf anything, the programme was rendered meaningless by the huge domestic borrowings and lack of fiscal discipline. To say the fact the programme failed to reduce¬†budget deficits which it was planned for. It also failed to bring down interest rates and the inflation. I think it cannot be taken on board by the current government having failed miserably like that,‚ÄĚ said Gondwe.
But Economic Association of Malawi (Ecama) Chief Executive Officer Nelson Mkandawire cautioned the government against unnecessary changes on the macroeconomic policies.
He said willy-nilly abandonment of such policies would impact on inflation.
‚ÄúWe believe that some of the policies have really made an impact as demonstrated by the inflation that was high but has been reduced. Should we make any mistake on policies on the exchange rate regime and fiscal discipline, we will make a direct impact on the inflation which we would have loved to see going down.
‚ÄúGovernment should have looked at the whole programme and identify progress made so far.
When the programme was introduced there was drainage of resources and at the moment the economy is at a different level and the best government would have done was to re-examine the programme apart from realigning it to the governing party‚Äôs manifesto,‚ÄĚ said Mkandawire.
Business Consult Africa Executive Director Henry Kachaje agreed with Mkandawire.
He said a review was relevant if government was to consider prospects of having long-term programmes and to achieve continuity in economic management.
‚ÄúI would love to see the country coming up with more long term programmes of up to 30 to 50 years so that the country would look at sustenance of national plans.
A review would have been a better option,‚ÄĚ said Kachaje.
In his reaction, People‚Äôs Party spokesperson on economic matters in Parliament Ralph Jooma denied the derailment of ERP.
‚ÄúThe International Monitory Fund would not have bothered calling for the sustenance of some of the economic policies that People‚Äôs Party introduced,‚ÄĚ said Jooma.
Presenting a provisional financial plan on Friday, Gondwe said the preceding administration plunged the country into a K340 billion domestic debt accumulated from the last financial year.
He said that debt would cost the nation an annual interest of K92 billion.