Africa-Press – Malawi. Former Reserve Bank of Malawi (RBM) Governor Dr. Dalitso Kabambe says the current Malawi Kwacha devaluation is reckless as the approach does not have monetary and fiscal policy fundamentals for its sustainability.
Dr. Kabambe observes that 44% of Malawi Kwacha’s devaluation will continue to hurt the poor as the already high cost of living will soar further. He, therefore, predicts that Malawi’s economy will not recover despite the recent devaluation, “Malawians should expect further devaluations under President Lazarus Chakwera’s administration”.
Kabambe is reacting hours after the Reserve Bank of Malawi (RBM) devalued the Malawi Kwacha from MK1,180 to MK1,700 against the dollar. “Looking at the timing, this must be a prior conditionality for ECF. Since MK1,700/US$ is still below the market equilibrium, we should anticipate further depreciations.
“Furthermore, this devaluation is just as reckless as the previous one given those fundamentals of the monetary policy stance remain helpless and fiscal consolidation is nonexistent”, observes Dr. Kabambe in a statement issued.
Dares Dr. Kabambe, “There will be no recovery from the macroeconomic meltdown. It will only make the suffering experienced by Malawians worse, as prices of basic goods and services such as fuel, fertilizer, and food items, will soar. Mark my words”.
RBM Governor Wilson Banda claimed that spot checks conducted by the RBM indicate that the market “can clear bills” at the new exchange rate. The 44% devaluation was implemented on the same day President Lazarus Chakwera flew to Saudi Arabia to sign an agreement for an MK22 billion loan which will be used for the construction of the Mangochi-Makanjira Road.
Since assuming leadership in 2020, President Chakwera has been struggling to fix an ailing economy characterized by high inflation, cost of living, shortage of forex, fuel, essential medical suppliers, and among others.
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