Chanthunya pushes for abolition of exchange controls
One of Malawi’s renowned economists Dr Charles Chanthunya has asked the country’s monitory authorities to consider abolishing the existing exchange controls to contain the acute shortage of forex which Malawi is facing.
Chanthunya was speaking Saturday on ‘Contemporary Issues’ aired on Radio Islam which is hosted by Amadu Rashid Mapila.
The weekly panel discussion program which spans two hours was discussing the recent recommendation by the International Monetary Fund (IMF) authorities that Malawi should further devalue its local currency to at least MK250.00 to a dollar as a way of solving the economic challenges the country is going through.
Chanthunya an economic lecturer at Blantyre International University said he doesn’t see that “devaluation is a problem” to the forex shortages.
“The problem here is the exchange control regime which Malawi is practicing. These are things that are highly contributing to the scarcity of forex in the country because no investor would prefer investing in a country with tight exchange controls,” he said.
He said many people in the Diaspora are shunning opening their bank accounts with Malawian banks due exchange controls that makes them difficult to withdraw their money.
Chanthunya said countries like Zambia, Mozambique and Tanzania abolished exchange controls some years ago and their economies are on sound footing now and there is no problem of forex scarcity.
“The exchange controls were best in the 1960’a and not in 2011. I always wonder why Malawi is sticking to them while many countries are abolishing them”.
Devaluation unavoidable
However many contributor to the programs spoke again the call for devaluations saying it would only end up pushing prices for various commodities and services.
But Chanthunya said whether one like it or not, devaluation will still take place sooner or later.
“The problem is that donors cannot give aid to a country that resists calls by the IMF. It is obvious that Malawi will abide to the IMF calls because failing to abide by the recommendation will mean more suffering to Malawians as do donor aid will not flow into the country,” he said.
Chanthunya accused government officials of being arrogant for paying a deaf eye to advice from independent economists.
He says in 2009 he tried to talk some government officials to consider abolishing the exchange controls but they told him point blank that they could not swallow what he was saying.
During the program Chanthunya also recommended the floatation of Malawi Kwacha than devaluation saying the problem of devaluation is that it will only end up rationing of the existing forex but not making it available on the market.
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