COMMENT - More neoliberal garbage heaped upon the people of Malawi. Read the comments on the original site - people aren't buying it. First fix Britain, Michael, then you have a basis from which to lecture to people about the virtues of currency devaluation. For Michael Nevin's information - we're aware that it weren't the 'bad policies' of President Bingu wa Mutharika that helped give the people of Malawi a hard time. It were the budget suspension by the EU over a $20 million extension of credit to Zimbabwe ("
(NYASATIMES) EU petitioned to suspend aid to Malawi over bankrolling Mugabe"), and the violation of the World Bank's policy of no support for agriculture which on top of that turned out to be hugely successful (
"(HERALD, NYT) How Malawi fed its own people"), that turned the West on President Bingu wa Mutharika and the people of Malawi. Now Michael Nevin is trying to sell that Malawi would have become a failed state if they hadn't devalued the Malawi Kwacha? What a twerp. In Nevin World, it is ok to increase the suffering of the Malawian people, as long as it means greater profits (lower wages) for the extractive industries.
Malawi could have become a failed state without devaluation- British diplomat
By Raphael Tenthani
December 15, 2012
Historic relations between Great Britain and Malawi hit its lowest ebb when former President Bingu wa Mutharika expelled Her Majesty’s top envoy in Lilongwe after a leaked diplomatic cable to London described him as “increasingly becoming autocratic and intolerance of criticism”.
Following his death in April, his successor Joyce Banda went on a diplomatic charm offensive which saw the restoration of residential diplomatic relations between the two countries. RAPHAEL TENTHANI had a conversation with the new British High Commissioner to Malawi Michael Nevin.
Excerpts:
Your Excellency, welcome back to Malawi. I know this is your second tour of duty. How does it feel to be back? Have you found the country the way you left it or it has improved or deteriorated?
It is a great honour for me to be back in Malawi. In our postings system, we bid and compete for jobs, so I obviously wanted to come back and was fortunate to be able to.
I found that there is a growing young, confident, well-educated and talented group of people. There is a greater understanding of and demand for rights. Good progress has been made on infant mortality and raising longevity of life, the latter partly because of access to HIV/AIDS drugs. And there has been some infrastructure development.
But poverty is still far too high; the economic boom and bust, linked to politics, is too frequent; there is talk about large scale irrigation and commercialisation of agriculture but not yet a sustained national drive to achieve it; population growth threatens to undermine the gains made; and democratic institutions could be more robust and effective. However, I do sense the beginnings of a more serious internal discussion about Malawi’s future and the need to reduce donor dependency. The more the country collectively can agree on a vision and focus on getting there, the better.
Michael Nevin inspecting the guard of honor on the day he presenting his letters of Credentials to President Banda
Your coming signified a thaw in the soured relations between Lilongwe and London that came to a head with the expulsion of your predecessor, His Excellency Fergus Cochrane-Dyet. Recently, Britain announced a £20 million budgetary support to Malawi, the first budgetary support since suspension of aid in July 2011. Does this mean that all concerns that led to the suspension have been addressed?
What happened diplomatically between our two countries was unfortunate and I hope never happens again. However, Malawi and the UK have a long standing, deep and broad relationship that goes way beyond diplomatic relations. That helped during those difficult times.
Central to the UK-Malawi relationship is our shared objective to see Malawi lift itself out of poverty. I want to make clear that despite the difficult diplomatic period, the UK never abandoned Malawi. UKAid, through DFID, continued to help people access health, get education and feed themselves. That support has increased in response to what we judge as good economic and governance policies under the new government.
But the economy remains fragile. The one-off £20 million emergency budget support approved by DFID’s Secretary of State Justine Greening recognised that the country needs an extra boost to ensure macro-economic stability, within the context of progress on economic and budgetary management, governance and human rights. The Secretary of State wants to allow the Government to build a good track record of further progress before making any decisions on regular budget support.
One of the reasons that led to either suspension or delay in disbursing of aid to Malawi by the West was the Mutharika administration’s refusal to devalue the kwacha. Now the government of President Joyce Banda has not only devalued but also floated the kwacha. The results are there for all to see: prices of goods and services have gone through the roof. Do you believe it was right for Malawi to not only devalue but also float the kwacha?
There is no doubt that the Malawian economy was in bad shape as a result of the poor economic policies pursued by the previous administration. Perhaps the pain could have been lessened if there had been a move to devalue much earlier, during the last government. But we are where we are.
Floating the exchange rate is part of an appropriate monetary policy. I commend the Governor of the Reserve Bank of Malawi for conducting a difficult balancing act. If the currency does not float, the country gets a false sense of how much its imports do cost and their exports should cost. We saw the effect during the last administration, with currency black markets, forex flight, pressure on state institutions to cook the books and creditors deciding not to lend to Malawi.
Basically, the country was importing far too much, at an unrealistic price, and its reserves and credit were plummeting. Without devaluation, the country could have become a failed state.
Now, with a free exchange rate, international confidence is coming back, exporters to Malawi believe they are getting a fairer price, as do exporters from Malawi, and macro-economic stability is returning. Inflation is high, but it is not hyper-inflation. Sticking to the current monetary, and most importantly, fiscal policies should help to reduce inflation next year.
Some quarters are urging the Banda administration to halt the floatation of the kwacha. Do you think that that would be a wise thing to do?
It would be a disaster. You would quickly see the impact. Economic policy reversals and uncertainty are what the financial money markets, creditors and investors are most wary of. Credit and forex would soon dry up and the black market for forex would return.
All the economic reforms implemented so far are in line with Malawi’s economic recovery programme as agreed with the IMF. We believe this was necessary to address long standing concerns around economic management. If these measures are abandoned, there is a risk that the economy could get worse.
Critics say the West, including Great Britain, hoodwinked the Banda administration to devalue the kwacha with assurances of injection of aid to cushion its after-effects. But the reality now is that such aid is only coming in trickles. Do you agree that such critics have a point?
First of all, the country made its own decision to devalue because it knew that this was in the country’s interests. Secondly, it is a myth to suggest that donors have not responded. From April 2012 to the end of this year, donors will have injected over $0.8billion into Malawi. UKAid alone accounts for over £88 million of that. This is far higher than initially intended.
So any suggestions that the donors have not fulfilled their side of the bargain are either made through lack of knowledge or mischief.
Malawi is still grappling with the issue of minority rights vis-à-vis whether or not to decriminalise same-sex relationships. Prime Minister David Cameron was quoted as saying its aid to developing world will be tied to how such countries treat rights of minorities such as gays and lesbians. Can you explain this?
Our position that fundamental rights, including those of minorities, should be upheld is well known. We are not promoting or forcing anyone to adopt a particular lifestyle. But we do not agree that someone should be put in prison simply because they are gay. Human rights are universal and should not be determined by sexual orientation or gender identity.
But it is for Malawi to decide how to handle this issue within its human rights responsibilities. We welcome the debate that has been started. We do not tie our assistance or relationship purely to one issue, but instead consider the broader indicators and trends of good governance and human rights.
The debate should be conducted on its own merits, not whether there will be more or less money from donors.
There is an on-going debate on whether or not it was proper for President Banda to put the Malawi Electoral Commission under the office of the Vice-President. What’s your take on this?
The independence of the MEC is vital; as is the perception of a credible election. We understand too that the MEC needs a docking point within the administration to help it achieve its objectives. It is for stakeholders to decide whether current arrangements fulfil those goals.
Lastly, Your Excellency, several European countries – including Great Britain – are fighting recession. Will this have any effect on volumes of aid to developing countries like Malawi? (I am specifically talking about the United Kingdom here.)
Yes, we have an austerity budget in the UK. Times are tough there too. That is why it is important to make every pound count, and for the Malawi Government to ensure it is prioritising the right things.
But, despite our own difficult situation, the British people and Government understand the importance of assistance to other countries, and the positive impact that in turn can have on the UK. The British Government remains committed to achieving its target of 0.7% of its GNP spent on development assistance by 2013. The UK – and DFID in particular – has won great admiration for this and is at the forefront globally in urging other countries to match that commitment.
*Source: Daily Times
Labels: AMBASSADORS, GREAT DEPRESSION II, KWACHA (MALAWI), MALAWI, MICHAEL NEVIN, NEOLIBERALISM
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COMMENT - More of the same from the IMF, and it's global war against the middle class, and enforcement of corporate exploitation. Devaluing the Malawi Kwacha means stealing the savings and work of the Malawian people, who are the only ones to pay taxes and save. By the way this article from Nyasa Times is very apologetic to the IMF, and it's usual 'human rights concerns' in countries that do not follow their 'policy prescriptions' or sanctions regimes in lockstep, including enforcing sanctions against Zimbabwe. Malawi's human rights are no worse than those in surrounding countries, and a hell of a lot better than in the DRC, where entire regions are run by transnational corporations and the militias and armies they EMPLOY to steal the people's resources - something to keep in mind. Also tellingly, comments have been closed on this article at Nyasa Times. They also neglect to mention the budgetary retaliation against the Malawi government, because of it refusing to take an anti-Zimbabwe stance and extending a loan to the country of Zimbabwe. Read from back in 2009:
(NYASATIMES) EU petitioned to suspend aid to Malawi over bankrolling Mugabe. To quote the Brigadier: "“Our argument is that SADC countries have been derelict in their duty to Zimbabwe. Why should countries which support Mugabe’s tyranny receive money from EU taxpayers?". This is the level of vindictiveness and retaliation that is used to enforce the New World Order. By the way, now Member of the European Parliament Brig. Gen. Geoffrey van Orden is a lifelong careerist in British Army Intelligence.
Malawi devalue Kwacha, insists IMF
By Mabvuto Banda, Reuters
The International Monetary Fund (IMF) said on Saturday that Malawi, which has seen donor aid dry up and revenue shrink, should cut spending and reiterated its call for the devaluation of the kwacha currency.
A mission from the fund has been taking stock of the southern African country's public finances, which are in dire straights as
Britain and the United States have frozen aid packages worth hundreds of millions of dollars over concerns about the
human rights record of President Bingu wa Mutharika.
With the uncertain outlook for government revenues and mounting pressures for wage increases, the mission urges the authorities to begin to identify Lower priority expenditures that could be cut, IMF Mission Chief for Malawi Tsidi Tsikata told reporters.
Government will have to devalue the local currency because the official exchange rate is failing to anchor inflation expectations as a growing share of imports is being priced at the significantly depreciated parallel exchange rate, he added.
The collapse in donor funding, which accounts for 40 percent of the budget,
[In retaliations against the extension of a loan to the Zimbabwean government, which is under international siege. - MrK]
has put pressure on the kwacha, forcing a 10 percent devaluation last year to 166 to the dollar although it remains well shy of a black market rate of close to 300.
Malawi's inflation rate has climbed into double digits with the February inflation pegged at 10.8 percent up from 10.3 percent in January.
Land-locked Malawi is one of the world's poorest countries and its economy is heavily dependent on agriculture, much of it subsistence.
[Subsistence farming is a hell of a lot better than the presence of the giant foreign owned tea plantations, who only accumulate wealth for themselves, which they then ship back to Britain.
- MrK]
Labels: IMF, KWACHA (MALAWI), NEOLIBERALISM
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COMMENT - Currency devaluation is part of a failed ideology. The country of Malawi must develop in a way that works for the people of Malawi, not transnational corporations. The economy needs MORE buying power, not less, and devaluing the currency is punishing savers and anyone who gets paid in the Malawi Kwacha. This is part of the IMF's standard policies to rob the people of the planet blind. Greece is not standing for it, neither should the people of Malawi. President Bingu wa Mutharika is doing the right thing.
Mutharika courts chiefs on Malawi Kwacha devaluation
By Maurice Nkawihe, Nyasa Times
President Bingu wa Mutharika over the weekend met some traditional chiefs in a bid to drum up
support against International Monetary Fund (IMF)’s insistence to devalue the local currency, Kwacha.Mutharika held a two-day caucus at Sanjika Palace between Saturday evening and Sunday afternoon where among other things he persuaded the chiefs on how to dart the local masses on the IMF agenda of devaluating the currency again, Nyasa Times has learnt.
According to one top government official who attended the meeting, Mutharika urged the traditional chiefs who were drawn from several districts across the country including Thyolo, Zomba, Chikhwawa and Dedza to help his government win over the people trust over the poor performance of his administration.
Chiefs being used to back Mutharika against devaluation
“With opposition siding with the international donor community on the devaluation of Kwacha, it was wise for the President to have the local chiefs on his side. The President had a very successful meeting with them. They wined and dined while educating them on the dangers of further devaluating Kwacha,” disclosed the source.
According to the source, the chiefs will be used by government to advance Mutharika’s stance on devaluation of Kwacha through the country’s public media houses Malawi Broadcasting Corporation (MBC) radios and Television (TVM) among other avenues through public resources.
Mutharika has publically challenged the IMF on the decision to further devaluate Kwacha. During the opening of budget review meeting of Parliament, Mutharika vehemently stood his grounds arguing he will not bow down to IMF and international donor community’s pressure to devaluate the local currency.
“You can see that almost every sector of the society is backing the IMF. The President has no option but to ask the local chiefs rally behind him in order to overcome the pressure. As matter of fact they have been promised a lot if they manage to win the rural masses on the issue of devaluation,” added the source.
The grouping of the chiefs consisted Traditional Authorities (T/A)s, Group Village Headmen and Paramount Chiefs.
The chiefs have already started their campaign against the devaluation of the local currency through state television where they are vehemently rejecting the calls by IMF to devaluate Kwacha. Among other arguments, the chiefs are citing the rising cost of living once Kwacha is devaluated as one major factor to affect poor masses once IMF agendas are advanced.
Meanwhile, economists and representatives of the civic society groups are questioning the competence and credibility of traditional chiefs in commenting on devaluation.
Professor of economics at Chancellor College of the University of Malawi, Ben Kalua told a local radio: “They don’t know anything about economics. There are technocrats in this country who studied economics and they are the ones to be left to make decisions on these issue.”
Executive director of Justice Link Justine Dzonzi said the move by the chiefs is a staged move by government.
“They must have been told to rally support behind the president on this particular issue, and that’s why it’s difficult to attach any specific value to what they have said,” Dzonzi said on Daybreak Malawi programme on Capital FM.
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COMMENTS:
Moni Says:
Economists of the pocket are the ones we have here in Malawi, the yes bwana's because they think whatever the Mzungu says is right and that we as Africans can never be right. In 1994 on February 21 to be specific is when these IMF thieves managed to force Malawi government to float our Kwacha. By then, US$1 was = to K4. After multi party elections, our government was forced to shed off public companies which were supplementing our budget through its profits and made the country to rely on taxes only. Malawi government had Chipiku stores, MMM, Hardware stores, MDC, Mpico, Nico, Commercial Bank, MPTC, Shire Bus lines, Cold storage, Malawi railways, David Whitehead, Oilcom, Encor, Agrimal, Pew, Sucoma, MBS and many more in which it had shares or owned them. At the end of the year, the profits of those companies were going into treasury. Because IMF and WB saw that if we have those companies which are making our economy strong and that we may one day manage to stand on our own, they brought these two draconian so called structural adjustments.
1. Privatise companies that supported government and
2. Devalue the kwacha so that they buy and destroy those companies with few dollars.
Out of all the companies I highlighted above, which one is functioning as it used to when it was government owned? Most of those companies are now non existent, people who were working on those companies were rendered jobless and their families suffers up to now. For seventeen years, we have been devaluing our Kwacha from K4-$1 up to now when it is K165 – the same $1. In all these devaluations, what can we point as a gain to the country apart from goods getting expensive and the income stagnant? If we have failed to gain in this leap of K4 to K165 devaluation, how are we going to have any fruits after devaluing it from K165 to a mare K250 apart from making Malawians suffer even more? Is Malawians income going to be increased to much this devaluation now or is it going to be the same song of suffering and ridiculing us as lazy bunch of people who makes noise as chickens? Mr. president, please stand your ground, don't let Malawians suffer because of the policies of these thieves who eats through our sweat. This time around, tell them that we have had enough of their bad policies, they better continue them in their countries. We will manage with the little we have. We have suffered enough under their hands, maybe we try another way. We know we will suffer because they will try to close everything so that we fail, but we as Malawians, we are brave enough and sure that one day, we will come out victorious.
Labels: BINGU WA MUTHARIKA, CHIEFS, IMF, KWACHA (MALAWI), NEOLIBERALISM
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COMMENT - African leaders need to form a united front against the idiocies of Neoliberal Economic Theory (privatisation, deregulation and free markets for corporate capital). This 'currency devaluation' to 'increase exports' is a scam which will cost the Malawian people because of a Kwacha price increase in the price of imported goods like fuel, capital goods, etc. Now if Malawi had a malawian owned manufacturing base, they could go the route of China. The President is absolutely correct in rejecting this policy prescription.
Bingu lashes at IMF, declares Kwacha will not devalue
By Nyasa Times
Published: September 22, 2009
Malawi President Bingu wa Mutharika has stood his ground that he will not devalue the currency, the Kwacha as argued by economicsts and has challenged International Monetary Fund (IMF)to tell what benefits will it be to Malawi if the currently is devalued.
Economists have been arguing that strong kwacha has been hurting the economy by making Malawi exports more expensive for foreign customers and also creating shortage of forex.
But Wa Mutharika in video interview post on: said the assertions are misplaced.
“The shortage of foreign exchange is not because that the Kwacha is not devalued. Infact, people are saying overvalue it and I am asking economists to tell me what is the correct value, because above that is overvalue, below that is devalue, what is correct. They don’t say,” said Wa Mutharika.
Wa Mutharika, an economist who worked for the World Bank, said he could not buy the theories to devalue Kwacha.
“These are things we put in economic textbooks. They are saying if we devalue the Kwacha then we will make our exports competitive. Which exports? Tobacco is never affected by the kwacha. You can devalue anything, it will not be affected. Tea is not affected. There are fixed markets. Cotton is not affected, so you devalue the kwacha, who benefits?” said the Malawi leader.
He said devaluing the currency will invite national economic depression.
“The day you devalue the kwacha, the price of oil, everything will go up for the ordinary person. Even tomatoes the price will go up, even onions will go up. So the inflation goes up,” said Wa Mutharika.
The economist-President of Malawi said IMF are contradicting themselves on economic orthodoxies.
“Am saying that the IMF has a contradiction in their mind, they don’t know what they are talking about. They talk about macroeconomic stability. What is stability? Stability is a level. The moment you take one of the parameters and devalue that stability is disturbed. Because then inflation comes in. And they saying they are following macroeconomics. I don’t know what kind of economic are the IMF,” said Wa Mutharika.
“And I am ready to meet them. I want one person to tell me one good reason or one advantage that are good to Malawi for devaluation. Perhaps ten years from now, if we have range of products that we are manufacturing that are going on the international market, perhaps the case of devaluation will make sense,” pointed out Wa Mutharika.
“But at the same time, have you ever heard the Americans, the British, the Germans, the French, the Chinese [and] the Japanese- devaluing? When did you hear them devaluing their currencies? But they are asking us to devalue, they themselves do not devalue,” Malawi leader said.
“So,” the President concluded “I am just keeping my ground and really until someone convinces me, Kwacha will not devalue.”
Malawi Kwacha has been trading at MK140 against the US dollar in recent days.
This is not the first time Wa Mutharika has defied IMF. In 2005, the President resisted that IMF restrictions on subsidising agriculture and introducing ‘Farm Input Subsidy programme’ that has transformed the country, that was once reliant on international food aid to feed half of its population, into a maize exporter.
Labels: ARTHUR MUTHARIKA, CURRENCY, IMF, KWACHA (MALAWI), NEOLIBERALISM
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