{"id":57873,"date":"2024-02-01T22:40:58","date_gmt":"2024-02-01T22:40:58","guid":{"rendered":"https:\/\/www.africa-press.net\/malawi\/all-news\/bitter-pill-to-swallow"},"modified":"2024-02-01T23:01:13","modified_gmt":"2024-02-01T23:01:13","slug":"bitter-pill-to-swallow","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/malawi\/all-news\/bitter-pill-to-swallow","title":{"rendered":"Bitter pill to swallow?"},"content":{"rendered":"

Africa-Press – Malawi. <\/strong><\/span>Malawians are still murmuring about the recent 44 percent devaluation of the Kwacha. Who can blame them? Commodity prices have rocketed. Not just commodity prices; services, too. On Tuesday this week, I went for my dental appointment at my favourite clinic in Blantyre and, while waiting to be attended to, a certain young lady [Of course, I know that all ladies are women and that not all women are ladies] trod into the room.<\/p>\n

In no time, she handed a sealed envelope to the receptionist\u2014 another lady\u2014 whereupon the receptionist opened the envelope and shouted: \u201cOh, no! It cannot be!\u201d<\/p>\n

When the lady who had brought the envelope left the place, the receptionist said, aloud: \u201cWe buy dentures from them and they have raised the price from K80-something-thousand to K110,000.\u201d That is it. Prices of both commodities and services have rocketed.<\/p>\n

Now, while Malawians are still thinking about devaluation, and how to navigate everyday challenges, in comes the news that the International Monetary Fund (IMF)\u2014who definitely discussed the issue of devaluation with the country\u2019s policymakers\u2014 has suggested that car import charges be raised.<\/p>\n

Apparently, the charges are lower in Malawi than other countries in the region, a development the Bretton Woods institution has linked to the rising demand for fuel. In other words, IMF wants the authorities to put in place urgent measures to contain growing demand for used motor vehicles and fuel imports.<\/p>\n

In the Malawi IMF Country Report No. 23\/375 released on Wednesday this week\u2014 maybe they timed it to come after the Reserve Bank of Malawi\u2019s devaluation announcement\u2014 the fund claims that rapid motorisation seems to have been driving the rising fuel demand.<\/p>\n

The Bretton Woods institution further points out that Japanese secondhand (or used) car imports more than doubled from 2,948 cars in 2016 to 7,368 cars in 2022. It says there may have been both push and pull factors resulting in this rapid growth.<\/p>\n

In its own words: \u201cPrices in Malawi are comparatively low, reflecting lower taxation levels. Like in much of the region, Malawi\u2019s car supply is mainly sourced as secondhand imports from wealthier left-hand drive countries, primarily Japan but also Australia, Singapore, and Thailand. A few companies provide competitive services that allow African customers to select a vehicle online and have it shipped, imported and registered in their country.<\/p>\n

\u201cThe transparency of these companies\u2019 business model allows a comparison between secondhand car prices in the region; price differentials are due only to differences in transport costs and local taxation\u2014 including VAT (Value Added Tax), excise, duties, and related fees). Despite the higher transport costs to Malawi (requiring transit shipment through Tanzania), Malawi\u2019s car import prices are consistently the lowest,\u201d the fund says.<\/p>\n

It adds that Japanese secondhand car exports have grown rapidly since 2001, saying, after plummeting during the global financial crisis in 2008-09, they [prices] saw a dent during the China stock market turbulence of 2016, before suffering yet another dent during the Covid pandemic in 2020- 21, implying that they are sensitive to world economic conditions. It, however, warns of repercussions if Malawi does not mend its ways and stem cases of secondhand vehicle importation.<\/p>\n

\u201cThe high level of vehicle imports constitutes a drain of scarce foreign exchange earnings but also causes elevated demand for fuel (and political pressures for low and stable fuel prices). Mass motorisation and the resulting fuel demand constitute a macro-critical risk factor. Furthermore, the relative under-taxation of vehicles and fuel imply a sizeable loss of potential revenue,\u201d the fund says.<\/p>\n

It then suggests four policy actions that may be considered to close VAT loopholes and ensure that all residents are paying the \u201cfull tax\u201d on vehicle imports. These measures include raising import taxes on vehicles to at least the regional average, updating the fuel price formula, including by applying a market-based exchange rate and raising fuel taxes.<\/p>\n

Maybe, to avoid adding salt to Malawians\u2019 injury\u2014an injury suffered from the news and subsequent impacts of devaluation of the Kwacha\u2014I should end \u2018here\u2019.<\/p>\n

By \u2018here\u2019, I mean on this painful note. It is what it is, Dear Pain. The IMF is a ruthless doctor who, sometimes, even kills to pave the way for a mighty resurrection.<\/p>\n

For More News And Analysis About Malawi<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Malawi. Malawians are still murmuring about the recent 44 percent devaluation of the Kwacha. Who can blame them? Commodity prices have rocketed. Not just commodity prices; services, too. On Tuesday this week, I went for my dental appointment at my favourite clinic in Blantyre and, while waiting to be attended to, a certain […]<\/p>\n","protected":false},"author":84,"featured_media":57872,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[233,371,234],"class_list":["post-57873","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-malawi","tag-malawi"],"yoast_head":"\nBitter pill to swallow? - Malawi<\/title>\n<meta name=\"description\" content=\"Malawians are still murmuring about the recent 44 percent devaluation of the Kwacha. Who can blame them? 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