By Jack McAdams:
It must come as conventional wisdom a leader of any institution to understand the administrative and legal mandates that define operations of that particular organization.
Former Reserve Bank of Malawi governor, Dalitso Kabambe, seems to have either forgotten this cardinal rule or altogether ignored it for political expediency.
Day in and day out from April 2017 to July 2020 Kabambe as the lead banker and advisor to government led monetary policy and managed central bank in support of price stability, external stability and a sound financial system.
It, therefore, comes as a surprise to have such a man fail to tell the nation the truth on how economies calculate their respective import cover estimates.
In a recorded interview with private media house, Zodiak Broadcasting Station, Kabambe falsely accuses Professor Mutharika’s government of misrepresenting facts around Malawi’s current import cover which stands at US$600.6 million.
Experts and those enlightened around fiscal and monetary issues would shudder in disbelief to have a professional economist who once headed the Central Bank refuting figures he knows very well how they are arrived at.
Governments don’t just wake up and draw conclusions on what an economy’s import cover should be, no. It is a professional exercise that is blind to personal wishes or political convenience.
Kabambe should know well that even if the Governor or the Head of State wanted to manipulate these figures, it would be mission impossible at inception of such an idea.
The UTM leader knows very well that the process involves local monetary authorities compiling reserve data from relevant foreign assets and reporting them using established statistical conventions. International institutions such as the International Monetary Fund and World Bank also use their official data, their own analytical frameworks and, where necessary, estimates or projections to estimate the same.
Analysts examine the reporting period, assets included, import series used and whether the figure represents gross reserves or net international reserves.
Gross reserves show the stock of qualifying reserve assets, while net measures can account for specified foreign-currency liabilities and other drains. These measures answer different questions and should not be treated as interchangeable.
It can be stated without any iota of doubt that figures around import cover are a result of synergic collaboration between local experts and institutions, and the entire global financial network, all speaking in unison.
Kabambe should be truthful and not confuse Malawians on the US$600.6 million, import expenditure and the coverage period being used.
Any credible challenge requires evidence, honest and relevant evidence for that matter.
The responsible way to challenge a reserve figure is to test its source and methodology, not to dismiss it through assertion. Anyone disputing the US$600 million figure should identify the relevant month, produce the corresponding RBM statistical release and explain which reserve definition they believe is incorrect.
They should then compare the official reserve stock with the relevant import bill and reconcile the resulting cover with the IMF’s and World Bank’s assessments. If the figures differ, the discrepancy should be documented and explained.
A disagreement over whether reserves are adequate is not, by itself, evidence that the reported reserve stock is false.
In the ZBS interview, Kabambe has completely failed to explain why the stated reserves figure is false. All he has done is cherry-pick only the information he wants to substantiate his lies.
He must, therefore, not use his tenure as governor as a weapon mislead those who have never been in the shiny offices of the Central Bank headquarters at City Centre in Lilongwe.
Of the 16 men that have served as Governors at RBM, he is the only one who has chosen to join politics. His decision should not cloud his knowledge to a point of attacking the Central Bank misrepresenting it as a dubious institution that serves political interests.
That is bad practices in as far as politics is concerned by those who hold professional track records from elsewhere.
