Kwacha sinks lower: Malawians burdened as they welcome 2016

Malawians are on Thursday bidding farewell to 2015 on a bad note as the kwacha continues to tumble against the dollar and inflation is increasing becoming high pushing up the cost of living.

Foreign exchange market indicates the kwacha is trading at K1 000 to the British pound and K668 to the dollar.

 The kwacha’s performance is pushing prices of commodities and services up causing discomfort to Malawians, among them students studying with foreign institutions and paying their fees in foreign currency too.

An investment management and advisory firm named Nico Asset Managers, said in its economic brief the kwacha would continue depreciating in the short term as the lean season continued.

The kwacha has been depreciating rapidly in the third and fourth quarter of 2015.

The firm said the lean season had led to high demand for the U.S. dollar and that the dollar had also been strengthening hence the recent fall of the kwacha.

The firm envisioned that in the medium and long term, the kwacha was expected to depreciate due to the significant current account deficit and weak foreign direct investment inflows despite tobacco exports and improved forex reserves.

At a news conference at Sanjika Palace in Blantyre, President Peter Mutharika promised the economy would be under control by this month of December.

However, in a recent radio interview, a renowned economist at Chancellor College Professor Ben Kalua said economic fundamentals show that the economy is far away from stabilisation.

He said government’s internal borrowing, and the high inflation rate is putting the economy off balance.

Kalua doubted if Malawi would meet conditions set by the International Monetary Fund if the country is to qualify for the IMF extended credit facility that would attract donors to come back to give Malawi the much needed 40 per cent budgetary support whose absence has crippled the public health sector among key areas.

Finance minister Goodall Gondwe has assured Malawians that all will be well in 2016 though stressing it will take time for the economy to fully recover.

He was upbeat IMF will lead donors back to Malawi to resume aid in the year beginning Friday.

On the political front, Malawians are also leaving the 2015 with nolstagia following political battles between the executive arm of government led by President Mutharika on one hand and former president Joyce Banda who is in self imposed exile.

Banda is accusing the Democratic Progressive Party led government of orchestrating her arrest through connecting her to the infamous cashgate.

She said the DPP is doing all the smear in order to divert people’s attention from the critical economic situation the country is facing.

However, DPP spokesperson Francis Kasaila says the party is not meddling in cashgate issues which he said are eing handled by the director of public prosecutions and the Anti Corruption Bureau.

He said the DPP cannot lose sleep of Banda whom he said is politically finished as evidenced by coming a distant third in the 2014 general election, which he said is very unusual for a sitting head of state

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