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Wednesday, 23 September 2009

Mutharika vs The IMF

“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....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"
The economist-President of Malawi Bingu wa Mutharika takes on the IMF for providing unsubstantiated advice. The President is something of a serial defiant of the IMF . In 2005, he resisted IMF restrictions on subsiding agriculture and introduced the ‘Farm Input Subsidy programme’ that has gone some way in transforming the agriculture sector and turned Malawi into a food exporter. I can only assume that the IMF think the level of the Kwacha is hurting agriculture exports, that of course has to be balanced against the risks identified by President Mutharika. The problem of course is that IMF and World have little expertise on our economies. They build macroeconomic models based on little data and understanding, then go on to suggest solutions that would are routinely rejected in many developed countries.

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