Former Reserve Bank of Malawi Governor Dalitso Kabambe has described Wednesday’s 44 percent devaluation of the Malawi Kwacha as reckless.
In a statement, Kabambe said there will be no recovery from the macroeconomic meltdown in the aftermath of the devaluation.
He said the devaluation will only make the suffering experienced by Malawians worse, as prices of basic goods and services such as fuel, fertilizer and food items will soar.
Dr Dalitso Kabambe
Kabambe said looking at the timing of the devaluation, it must be a prior conditionality for International Monetary Fund (IMF) Extended Credit Facility (ECF).
“Since K1,700 per dollar is still below the market equilibrium, we should anticipate further depreciations,” Kabambe said.
Kabambe says the country should expect further depreciations of the kwacha as the K1 700 to a dollar exchange rate is still below the “market equilibrium”.
“Furthermore, the devaluation is reckless as the previous one given that the fundamentals of the monetary policy remain helpless and the fiscal consolidation non-existent,” he said.
In a statement on Wednesday night, RBM Governor Wilson Banda said the 44 percent devaluation follows the imbalances as well as the mismatch in the exchange rate in cash and telegraphic transfer.
The kwacha was also devalued by 25 percent in May 2022 and since January this year, the local unit has depreciated by 13.1 percent.
Meanwhile, calls have resurfaced to raise the current K50,000 minimum wage in response to the Kwacha’s devaluation.
Charles Kumchenga, President of the Malawi Congress of the Trade Union, expressed shock at this development.
He said the current minimum wage is not tallying with the escalating cost of living, emphasizing the necessity to increase it.
Meanwhile, Minister of Finance and Economic Affairs, Simplex Chithyola Banda will on Monday 13 November 2023 hold a press briefing in Lilongwe following the exchange rate alignment undertaken by the Reserve Bank of Malawi.
According to a statement released by the Ministry of Finance, the press briefing has been organised to outline the measures the Government has put in place to cushion vulnerable Malawians and stimulate economic growth.
The press conference will start from 9 am at the Ministry of Finance Conference Room.
