Column: Malawi Takes The IMF Medicine

by John Knox

The International Monetary Fund says Malawi – Scotland’s twin country in Africa – is on the road to recovery after coming close to financial collapse earlier this year. In its latest report the IMF praises the new president of Malawi Joyce Banda for steering the country back to stability. And it’s approved a new loan package of £96 million.

The former president Bingu wa Mutharika died suddenly in April, just as the country’s foreign reserves dropped to danger levels – less than a month’s worth of imports – and western governments suspended aid on suspicion of economic mismanagement and political repression.

On taking over, Mrs Banda promptly devalued the kwacha by nearly 50 per cent and allowed it to float on the foreign exchanges, instead of being linked to the US dollar. She removed the restrictions on foreign exchange and allowed petrol prices to rise to the true import costs.

It’s meant real hardship for her people – the price of the staple food, maize, has doubled, petrol is up 30 per cent, prices in general rose by 25 per cent. But foreign aid has started to flow in again. Britain gives around £93m a year to Malawi and is the biggest national donor. The Scottish government’s aid programme – £5.6m over the next three years – was never in doubt, because it goes directly to aid projects in the field and not to the Malawian government.

The IMF report concludes: “ Malawi’s fiscal and monetary policies are expected to put inflation back on a downward path by early 2013, while leaving room for increased growth and social spending.”

Mrs Banda has led the austerity programme from the front. She’s cut her own salary by 30 per cent – to a reported £26,000 a year (western politicians take note !) And she’s sold the presidential jet and the fleet of luxury cars enjoyed by ministers in the Mutharika regime.

Her opponents point out however that she recently spent £612,000 taking her delegation to the UN General Assembly and has gone on visits to seven foreign capitals since she became president. Her excuse was that she was lobbying for foreign aid – which, at one point, made up 40 per cent of Malawian government spending. “ If I just sit at home like a mother hen looking after her eggs, no one will come to help us,” she said.

Mrs Banda’s unexpected elevation to the presidency came as a mighty relief to western governments – not least the Scottish government which signed a co-operation agreement with Malawi in 2005 – as they watched Bingu wa Mutharika becoming increasingly dictatorial. Mrs Banda was vice-president but had left Mutharika’s governing party, the DPP, in protest at the way things were going. She founded her own party, the People’s Party, which earlier this month won its first by-election victory in Mzimba in the north of the country.

Bingu’s brother Peter – who was being groomed for the presidency – has now taken over the leadership of the DPP and has vowed to fight Mrs Banda at the next presidential election in 2014.

Meanwhile the 14 million people of this impoverished little country struggle on with their daily lives. The rains have not been good this year and the harvest is expected to be poor. Three quarters of the population are living below the UN’s poverty line of $1.25 a day. The AIDS epidemic, although gradually coming under control, still affects 12 per of the population. Scottish charities like Mary’s Meals are feeding thousands of school children their only meal of the day.

Old Malawi hands in the western world are hoping that Mrs Banda will remain the sensible mother figure she appears to be. She’s a self-made business woman and only the second woman to become president of an African country. All of the men who have run Malawi since independence – Hastings Banda, Baliki Muluzi, Bingu wa Mutharika – have descended into dictatorship and corruption. Perhaps Joyce Banda will be different.

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David Calder has been a broadcast journalist for over 30 years. Before moving to the Caledonian Mercury, he worked for the BBC (national and regional) as well as parts of ITV and the World Service. He worked for prestigious programmes such as The Money Programme, You & Yours, Today and The World at One. He spent two years making mini-documentaries for Radio 5 Live and was a regular correspondent for CBC (Radio Canada). He was a regular reporter on various news and current affairs programmes on BBC Scotland as well as producing or presenting (sometimes both) science, legal affairs and arts programmes. As well as his contributions to the Caledonian Mercury, he is also a freelance producer in Scotland for the satellite channel, Al Jazeera.