Tough task for Finance Minister

Post was last updated: June 21, 2019

By Taonga Sabola:

New Finance Minister, Joseph Mwanamvekha, might have grinned from ear-to-ear when President Peter Mutharika announced his 24-member Cabinet on Wednesday night.

But the jubilation is likely going to be short-lived and turn into a headache for the former Continental Discount House and Malawi Savings Bank chief executive officer when he reports to the office at Capital Hill this morning.

His immediate task would be to offer quick fixes to an economy which has emerged out of the May 21 elections in tatters.

Mwanamvekha, a former Secretary to the Treasury and founding member of the Economics Association of Malawi (Ecama), steps into office at a time the kwacha exchange rate is threatening to run away on the back of weak tobacco earnings and donor inflows.

The kwacha, which was trading at around K733 to the dollar before the elections, now hovers around K800, a development analysts believe is likely to fuel imported inflation with Malawi being a net importer of essential commodities such as fuel and agriculture inputs.

As if that was not enough, unrealistic election promises coupled with massive recruitments and job promotions have left Capital Hill facing a bloated wage bill against a fragile resource envelope.

In addition, the new Chancellor of the Exchequer has very little fiscal space to borrow with the economy already in distress with a monstrous K3.3 trillion public debt haunting Treasury.

Ecama President Chiku Kalilombe welcomed Mwanamvekha’s appointment as finance minister.

“It is a plus that he was a founding member of Ecama but note that, for us, it is not a must that a person has to be associated with us. We will thus offer advice regardless,” Kalilombe said.

The Ecama chief said Mwanamvekha’s immediate priorities would be to rein in on expenditure to ensure the gap between now and budget presentation should not be detrimental.

“Going forward, we expect him work at sustaining the stability and, more importantly, ensuring the same is used as a platform for sustainable growth.

“Prepare a budget that prioritises development that induces growth and also invest in clearing constraints that hinder the country from going forward,” Kalilombe said.

Mwanamvekha could not shine a spotlight on his vision for the ailing economy in a brief interview Thursday, saying he would say more in the near future.

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