Malawi Kwacha appreciation manipulated: Chakwera blasts Mutharka’s zero economic common sense

As some commentators have argued that the true value of the kwacha is being distorted, leader of opposition in parliament, Dr Lazarus Chakwera has accused the Peter Mutharika government of “deception” on economy, saying the Kwacha currency appreciation is being manipulated.

Reserve Bank of Malawi (RBM) statistics show the kwacha continues to gain more ground against major convertibles, appreciating against all major international currencies.

But Chakwera on Wednesday in his address to parliament in response to President Peter Mutharika’s state of the nation address delivered on Tuesday, accused government of peddling lies, saying Malawians should not be taken for granted.

“There are those who will tell us that the recent appreciation of the kwacha and the rise in the import cover are a sign that the economy is doing well. Nothing can be further from the truth,” said Chakwera, adding: “After the free fall of the kwacha in the last half of 2014, it is a known fact that the government manipulated the kwacha in December last year to score cheap political points. “

Chakwera said the artificial appreciation of the Kwacha has hit hard the vast majority of Malawians who are in the agricultural who also happen to be the major foreign exchange earners for the country.

“We all know that farmers bought their inputs expensively at the peak of the kwacha depreciation, come the time to sell their produce, farmers are literally being robbed in broad day light under the force pretext that the kwacha has appreciated,” he pointed out.

Chakwera, who is also Malawi Congress Party (MCP) president, told parliament that poverty levels remain “unacceptably high” in Malawi trashing assertions by President Mutharika that Malawi economy is doing very well.

“I challenge our economic experts who are often at home making economic analysis from the comfort of their air conditioned offices in their high rise buildings to come down from their ivory towers to go to the villages and ask farmers in Namwera, Bolero, and Nambuma whether they are experiencing the so called improved economy,” said Chakwera, trashing Mutharika address which claimed economic mini-boom.

“.Lets us not lie to our people, this economy is not doing well,” said Chakwera, a former Assemblies of God church leader.

Commenting on the import cover, Chakwera said companies and individuals “due to the poor performance of the economy”, do not have the purchasing power to enable them to import raw materials for the industries hence the reduced capacity for private sector to produce.

“You can check with Malawi Revenue Authority statistics on the dwindling tax revenue collections which are below 50% of our unofficially projected MK900billion 2015/2016 budget,” he said.

The opposition leader said MRA under collection of taxes is a reflection that the country’s capacity to produce is not growing but declining.

“Has the improved import cover translated into improved quality of life for ordinary citizens? The answer is no! Are we seeing business booming as a result of improved import cover? Again the answer is a big no! We should not be carried away by this improved import cover talk,” said Chakwera.

He also trashed government plans to issue zero interest rate coupons “as if we are in Japan for private sector to provide financing to government to be repaid in 3 to 5 years with no interest.”

Commenting on Reserve Bank’s recent decision to maintain the base lending rate at 25 per cent, Chakwera described it as exorbitant and extortionist rates which cannot stimulate an economy.

Economics Association of Malawi (Ecama) president Henry Kachaje said Chakwera was spot on in his speech.
“ I think he is right. Maybe let us start measuring our economic growth and development by looking at the people on the ground instead of doing it on the computer Spreadsheet,” he commented.

The debate on the president’s speech in parliament continues and Finance Minister Goodall Gondwe is expected to present the national budget on Friday.

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