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Bingu tells Parliament Malawi Kwacha will not be devalued

By Maurice Nkawihe, Nyasa Times

February 3, 2012   ·   65 Comments

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President Bingu wa Mutharika has shot down demands by International Monitory Fund (IMF) and other donors to devaluate the local currency, arguing doing that will only worsen poor people’s lives.

Mutharika while opening the budget review session of Parliament in Lilongwe, this morning vehemently argues that it was improper for IMF and other donor partners to demand further devaluation of Malawi Kwacha, describing the demands as unethical.

“It is surprising for IMF to demand developing countries like Malawi to devaluate their currency while developing country are not demanded to do. Even developing countries do not devaluate their currency anyhow, and whey they want to do so they do by their own strategy not advice from IMF.

“There is a need by IMF and other western donor countries to go to rural areas and demonstrate to the poor mass how the devaluation will benefit them. They need to explain to them how prices of commodities will be affected by this devaluation,” Mutharika said.

IMF insists Malawi Kwacha must be devalued by about 45 percent to between MK230 and MK250 to the US dollar if the bedridden economy is to be resuscitated,.

The IMF observes that the current rate MK165 is an “overvalue” of the local currency and not in tandem with the current trends on the ground. Currently, the kwacha is changing at MK230 to about MK255 on the parallel market.

In his speech, Mutharika further asked IMF and other donors to allow the country resolve its economic and political problems through its own strategies not by dictation.

“Devaluation for Kwacha will only hurt poor people in rural areas hard. I am here to protect the poor people I sworn to protect, therefore, the donors and other economic commentators should stop making recommendations that will worsen the livelihood of rural and urban areas,” he added.

He said IMF and World bank theories are not always right.

“They objected to the introduction of free ARVs but here we are saving lots of lives. They also objected to the farm input subsidy program but it has brought food security so why not allow me try our own policies,” Mutharika said.

Currently, Parliamentarians are meeting in Lilongwe for a budget review with calls from local economic commentators and opposition parties asking government to abolish the zero-deficit budget on grounds that it has failed the country.

Tags: Bingu wa Mutharika, economy, IMF, Malawi Kwacha, Parliament

65 Responses to “Bingu tells Parliament Malawi Kwacha will not be devalued”

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1. 65

   Pierra Says:

   February 5th, 2012 at 11:47 pm

   
   

   …trouble with politicians is that they are too arrogant to accept help even where they know they need it! Its not about convincing Malawians who are already filling the pinch about the dire economic situation; its about convincing trading partners that Malawi will afford to pay for what it purchases. If we fail to do that, the kwacha will be hard hit and any future devaluation will need to be very substantial in order to shore up support that we are not only bidding for time but are serious in wanting to resolve the economic mess. We cannot leave it to Malawians for resolve as our imports are from overseas. We trade internationally; we seek inward investments from overseas and not internally; so whatever happens we must be transparent enough in our economic recovery planning and policy prescription! In short, Mr president, draw up a list of bankers, economists and independent advisors as a think tank to pull the policy strands. This should be cross-partisan and multi-functional! Like 0 Reply

2. 64

   Gube Says:

   February 4th, 2012 at 10:40 am

   
   

   You do not understand baba. Malawi will need more money to import fuel if the kwacha is devalued to the level of K230 to a dollar.In anything that is imported Malawi will have to cough up more billions of kwachas than before and worse still it means all the raw materials that are locally produced(maize,cotton,rice gnuts) will be cheaply acquired by foreign markets you can’t see that? Malawi will even be more poor than than now. Like 0 Reply

3. 63

   Gube Says:

   February 4th, 2012 at 10:29 am

   
   

   Devaluing the kwacha is not a permanent solution to the current problems. IMF is not honest enough. Where was IMF during the recession of 2009?What advise have they given to nations affected by the Credit Crunch. Why are some western countries being bailed out economically.Where was IMF.Do not turn Malawi into a puppet state. The problems have a solution though it might take long but devaluing the kwacha will lead to serious suffering of the locals which will result in political turmoil. Mr President, you are right on this issue.Black market as you term it, is not a legal market hence it can not be used as a standard to measure the value of any currency.Come to your senses you hypocrites. Like 0 Reply

4. 62

   Stanley Pambalipe Says:

   February 4th, 2012 at 10:17 am

   
   

   You would only be stupid to support Bingu Wamutharika on whatever he says because it has no sense and logic.His trial and error economics is bad that has brought our country on its knees.Mwakhuta matemba ku Chigwajja mwati Bingu akunena zoona.The guy is a bustard and is not telling the truth. The IMF wants us to devalue to lessen the total value of imports into Malawi-most of which are unnecessary so that our reserves can bump up so that we are able to buy fuel.This is common sense and you dont need to go to school to understand this basic logic. Like 1 Reply

5. 61

   fiona Says:

   February 4th, 2012 at 8:41 am

   
   

   You can not white wash a mind with Omo. But you can wipe out a mind with whisky. Like 0 Reply

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