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Business » Featured
Malawi ruler pokes fun at IMF ‘no Kwacha devaluation’
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By Green Muheya, Nyasa Times |
February 18, 2012 · 40 Comments |
Malawi President Bingu wa Mutharika is insisting that country’s currency, the Kwacha will not be devalued as demanded by the International Monetary Fund (IMF) and poked fun at Brettonwood institutions.
Mutharika, an Indian trained economicst said on Sarurday on remarks aired live on state radio and television that devaluation “does not make sense(and) it will not assist Malawi economy” saying he will not allow it to happen because “someone in Washington has eaten too much beans.”
IMF Headquarters is located in the heart of the commercial district of Washington, D.C. in United States of America.
The President said he was protecting the impoverished Malawians “from commodity price rises” if the Kwacha was left to be devalued against major currencies, saying only the righ and some Asians business persons would reap the benefits of the devaluation.
Mutharika: No devaluation
He said “ the youths who have no jobs and the poor in the villages will be made poorer.”
“ We can’t devalue the Kwacha simply because someone in Washington has eaten too much beans,” Mutharika said., adding “If they smile in Washington, we will be weeping here. I will not devalue to safeguard you Malawians.”
IMF advised Malawi to devalue the official exchange rate further to between 230 to 250 against the dollar to address a foreign exchange shortage and stem a thriving black market, .
Malawi devalued the kwacha by 10% in August, but at 166 kwacha to the dollar, the official rate is not as attractive as the black market rate of between 240 and 250 kwacha.
The IMF said the overvalued exchange rate has led to foreign exchange market rationing and multiple exchange rates which are key deterrents to private sector activity and diversification.
“The objective of the devaluation is to remove some of the demand for foreign exchange by putting the price for foreign exchange to a more market-determined level,” the IMF said in a memo after its visit to Malawi in December.
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Tags: Bingu wa Mutharika, economy, IMF, Malawi Kwacha
40 Responses to “Malawi ruler pokes fun at IMF ‘no Kwacha devaluation’”
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Devaluation or no devaluation, Malawi’s economy is in the doghouse.
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Replyjohn thumbs up u are a real man fully loaded with wisdom;i salute your coment,ok.so listen very carefully you un educated barking dogs;if you dont know the meaning of devaluation,go back to fuckin schools and learn rather than making stupid ,primitive coments mtakhuta matemba.dont be haters,what has these mafias called ngos done in malawi with their bloody money?they only get richer and richer now you come on platform dinouncing the president coz now u also used a toilet paper.have you ever been abroad?zip yo mouths if u never went 2 school,if its been poor let us b coz u dont know mmene anthu akuvutikira kumudzi
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ReplyIndividuals owning forex accounts in local banks always want to draw out in US $ cash to obtain more Kwacha on the black market which is very attractive, who wouldn’t want to do this when the official rate is kept falsely stronger against the dollar?
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ReplyOgo! Ndarama za ku account yawo yakunja ija ikhuzidwanso chifukwa cha devaluation kapena ayi?
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Replywhy making such sentiments at a sporting event where the majority of people who were present have little or no knowledge on country economics??????
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ReplyKwacha just like most other african currencies are not tradeable currencies like the Rand and it is suicidal to float a non tradeable currency on the international market.IMF chaps know this and remember what brought inflation to zimbabwe is devaluation/loss of currency value.
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Replyam not an economist but i have to comment on this one: is devaluation of the kwacha the determining factor of forex problem in malawi. definately not. so why devalue it? we should think of ways of getting forex and not devaluation. first it started by guy rights, then it came to bad laws now it is the devaluation of the kwacha. what should we take? what are we exporting that needs our kwacha to be devalued? mouth of ngos and oppositions who get dollars after opening their big mouths to rubish their country holding everybody at ramsom. we do import cars drugs and others hence the whites want our kwacha to be devalued to their advantage and here we are saying yes devalue. let the prseident devalue it now and die in a months time then we will see if JB/JZU/ YM/ whoever takes over will not cry the loudest of all.come on guys put the interest of the ordinary man at heart.
Hot debate. What do you think?
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ReplyIt is hight time that Bingu and the rest of the country acknowledged that our economy is in shambles. Devaluation may not be the solution, actually it is not the solution. But neither is maintaining artificial value of the Kwacha under the pretext of protecting the poor sensible. It is mind boggling that Bingu does not seem to realise or care what damage he is causing the economy by his position.
I may not be an economist but it is glaringly apparent how the economy is bleeding from this nonsensical position which is not rooted in economics but arrogance and cheap politics.
For as long as there is change in this policy, as a nation we shall continue to heavily import even the most basic of things like match sticks which in turn hurt our local manufacture. For as long as the artificial values are maintained, there will be no forex in the formal channels and the black market shall continue to thrive. This in turn will affect production, government revenues, employment and badly hurt the economy.
Government must swallow its pride and liberalise or float, not ‘devalue’the Kwacha. That way, the value of the kwacha will be determined by economic fundamentals and the principles of demand and supply. This will ensure that forex can be found in the formal channels and suffocate the black market.
No doubt, liberalising the currency is going to hurt. But this is going to hurt because the economy has been festering under the surface of the skin and the infection has been speading. Its time to open the would so we can appreciate the extent of the problem and try to medicate the wound. If government or Bingu is worried about the impact this is going to have on the poor, then government should initiate policies that will cushion the poor against that impact. For example, if government may reduce or remove certain taxes on some items such as fertliser, or reduce vat etc.
That malawi is a poor country is self evident inspite of the grandstanding from Ndata. We are poor inspite of the monetory policy or the vale of the Kwacha against major currencies. Zambia or Tanzania are far better off economically despite the fact that their currencies are by far weaker than ours. What’s wrong? ‘Its the economy stupid.’ Fix the economy then the issue of the foreign exchange rate ceases to be a major talking issue. Its high time that Bingu and his government focused more on fixing the economy and rehabilitating our ties with donors in order to address the problems we are experiencing now. It doesn’t require anyone to go to India to study economics in order to understand this.
Ndatha wanu ine.
CheMussa
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ReplyThose against devaluation of the Kwacha should know that the longer it takes, the suffering continues. Malawians are already suffering and no sane leader can claim to be protecting them from rising commodity prices. The cost of living has already soured! This is disaster coming from a so called economist!
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8
ReplyDevalue we must, the longer he puts it off the worse it gets. It would have not been a problem if he did it in time, which is in small increments together with the actual value of the currency. by putting it off for 7 years he makes it into a disaster. this man is an economic destroyer, his policy needs to change sooner than later
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