##thandiza ”. dumbani mzale in an article in today ’ s the nation tried to produce a balanced article by putting together the comments by world bank ’ s country manager, and those by ben kalua, with a rejoinder from an unnamed economist arguing that “ recent monetary policy developments have triggered a high cost of borrowing by the private sector which could essentially retard malawi ’ s gross domestic product ( gdp ) of 4. 3 percent manufactures. will incur huge cost of production which could force them to pass on to consumers ; hence exerting pressure on the headline inflation rate. ” i wish i was in a position to determine how many economists agree with which side of the story. i will never know of course. but my sense is that even learned economists and experienced businessmen share the sentiments of the unnamed economist. fortunately, the imf board will not say to the staff team, hold on, what we hear in malawi is that people are hurting, companies are closing down, the government has no will or capacity to see through this complex reform program. no, they will not say that, not because it cannot be said but because we are not a special case. many people around the world are going through the same thing. not because the imf says so. but because when you mess up you pay the price. we all messed up. we all consumed beyond our means, thanks to an over - valued exchange rate. we all praised the government for single digit inflation and we agreed with the measures being put in place to generate foreign exchange. to justify an over - valued currency, we called upon government to force every exporter to repatriate our hard won foreign exchange – i am yet to fathom how a country can claim hard currency it has not earned – the government only owns what it earns through taxes and the hard currency earned through sales of its local currency. the government does not own anybody ’ s assets, and that ’ s by constitution. bis central bankers ’ speeches the short of the story is that we have all become indigenous economists – we recall that we have lived on subsistence farming all our lives, we will make it. global rules of the game do not apply to us – we have our own rules. the man on the street is entitled to undiminished income. he is entitled to zero inflation. if the government has devalued the currency, it must increase salaries by as much. i am not even sure that

the ailing companies have the resources to fully compensate for the lost purchasing power without passing on the cost to the same consumer. we want to live comfortably as before, forget the fact that others are unemployed because we are busy exporting jobs through an overvalued exchange rate, through negative interest rates that undermine the savings culture and encourage low productivity. forget the many hours spent out of the office in search of fuel that never came or that finished just before we got there. allow me to conclude on the following note. if we had a choice, we would have left the kwacha and interest rates alone. however, the extent of economic malaise was unprecedented in our short history and it will take a lot more work and sacrifice by the man on the street before things get better. this is not the time for growth. it is the time for correction. hopefully by this time next year, so i believe, this country will be different. the key to successful recovery will be the patience of the man on the street and the political will to implement the 2012 / 2013 budget as passed. with that the currency will stabilize ; interest rates will begin to come down ; foreign exchange reserves will be built up and investors will start looking at malawi again. inflation should be contained within an average of 18. 5 percent in 2012, coming down slightly to about 16 percent in 2013 but with a much lower rate at year - end. growth will pick up as projected at 5. 9 percent and payments arrears will be history. we will forget that fuel used to be scarce. with increased reserves, we will open up trade more so that malawians can enjoy the economic freedoms so enshrined in our constitution. that will be the time for the central bank to watch carefully growth prospects and prevent a runaway inflation – single digit inflation will come but in a sustainable way. i can foresee increasing investment in both export and import - substitution industries. that ’ s what a free float supported by appropriate other monetary and fiscal policies brings about. obviously, that brings about some instability but not forex shortages. by the way, with a free float you do not need 3 months import cover every time. but we must build up reserves even beyond three month because this is a country and we face many exogenous shocks which require reserves to be addressed expeditiously. well, we do not have the luxury of the counter - factual – what would have been the situation had the government – as two journalists