Chakwera’s “Tonse Alliance” in ungovernable debt crisis
The Tonse Alliance government of Malawi is spending more than it is supposed to and has spent 73 billion kwacha already just in nine months. This is contrary to the campaign promises made by Malawi Congress Party in 2019 tripartite elections and later by the Tonse alliance in 2020 fresh Presidential campaign. Reverend Lazarus Chakwera promised to change…
By Burnett Munthali
The Tonse Alliance government of Malawi is spending more than it is supposed to and has spent 73 billion kwacha already just in nine months.
This is contrary to the campaign promises made by Malawi Congress Party (MCP) in 2019 tripartite elections and later by the Tonse alliance in 2020 fresh Presidential campaign.
Reverend Lazarus Chakwera promised to change everything for the better but the opposite is true today.
Nothing is moving in many areas and the common man on the ground has vowed to teach this leadership a good lesson when the time comes.
People on the grassroots even doubt if ever Tonse will ever step their feet on the local areas where most of them are struggling harder than ever before just to survive, nothing more than that.
Changes in government debt over time reflect primarily borrowing due to past government deficits as well as present government careless spending. A deficit occurs when a government’s expenditures exceed revenues.
The main causes of public debt are undoubtedly excessive expenses, which may be caused by the militarization of the economy, extensive administration or high social transfers.
Government is not doing anything to minimize spending but always has the desire to spend even more than any previous government has done before.
Growing debt also has a direct effect on the economic opportunities available to every Malawian. If high levels of debt crowd out private investments in capital goods, workers will have less to use in their jobs, which will translate to lower productivity and, therefore, lower wages.
Other impacts of public debt can crowd-out private investment and threaten economic growth through higher long-term interest rates, higher inflation, and higher future distortionary taxation.
There is another reason government debt is a problem. A nation saddled with debt will have less to invest in its own future. Rising debt results in fewer economic opportunities for Malawians. Rising debt reduces business investment and slows economic growth. It will also increase expectations of higher rates of inflation and erosion of confidence in the Malawian kwacha.
The higher the national debt becomes, the more the Malawi nation will be seen as a global credit risk. This could impact Malawi’s ability to borrow money in times of increased global pressure and put us at risk for not being able to meet our obligations to our member states in different groupings.
Solutions
There are various options that exist to help government deal with debt problems. These include debt management plans, administration orders, debt consolidation.
The government of Malawi at one point put in place austerity measures in order that the nation moves forward. However, from the look of things, it is doubtful if the President understands anything what austerity measures is all about and how to go about the measures. His actions are just against his very own austerity measures therefore making a circus show.
Austerity measures Policies that are considered austerity measures include an increase in taxes, cutting back on government programs, such as healthcare services and aid to veterans, a reduction in pensions, and a reduction in salaries and wages for government employees.
A typical goal of austerity is to reduce the annual budget deficit without sacrificing growth. Over time, this may reduce the overall debt burden, often measured as the ratio of public debt to Gross Domestic Product (GDP).
However, what we see is that Malawi government continues to spend more than is necessary, meaning to say that the President doesn’t know what he is talking about.
Chakwera does not even know what to implement and how to implement anything regarding austerity measures but just talking blues.
Disclaimer: The views expressed in the article are those of the author not necessarily of The Maravi Post or Editor
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