Malawi government has said it has no intention to put into circulation new K5 000 banknote after the plans has not pleased some consumers and economic commentators, who argue that the move points to longer term macro economic downturn.
Minister of Finance, Economic Planning and Development Goodall Gondwe told official Malawi News Agency (Mana) that government plans to introduce a K5 000 bank note, to reduce printing costs.
But a statement released on Thursday by Treasury said government has no plan to introduce the new bank note which had already been christen by people as ‘Namapopa’ (bloodsucker) a year after introducing a K2 000 note.
Treasury statement said Minister of Finance Gondwe “only agreed with the supposition of a [government] reporter that the issue of K5 000 would be appropriate at this time now that the rate of inflation was in decline.”
Read the statement in part: “The general public is therefore being informed that there is no likelihood nor plans of issuing a higher bank note than the K2 000 note in the foreseeable future.”
The statement further said Malawi’s macro economy, including the Kwacha currency, is now stable and the government intends to maintain the stability.
Gondwe received a barrage of criticism on the move to introduce the K5 000 bank note.
Consumers Association of Malawi (Cama) executive director John Kapito said the introduction of the note would be an indication that the kwacha has lost value as evidenced by high cost of living.
“The higher the note tells you how stinking our economy is becoming. This is something authorities need to be careful about because it can also trigger inflation and this is something they need to do wisely.
“We have seen countries where high notes were introduced such as Zimbabwe and the repercussions they have had. There are a lot of areas we could have managed the current situation, but not introduction of new note,” Kapito said as quoted in The Nation newspaper.
Catholic University dean of social sicences Gilbert Kachamba also said quashed Gondwe for disclosing about the new bank note, saying “there is no justification to introduce a higher currency denomination.”
However, Economics Association of Malawi (Ecama) president Henry Kachaje said the K5 000 bank note was long overdue, considering how much the kwacha has devalued over the past years and is in line with international parameters which benchmarks the largest note to be close to a $5 (K3 670) value.
Meanwhile, Gondwe has blasted economic critics describing them as prophets of doom.
“I sometimes get confused with these so-called experts because all what they do is to tell how bad things are going to be they never talk about how good things are going to be.
“I do not take them into account at all; I take the facts as they are and decide how best I can improve the things,” Gondwe said in quotes reported by Daily Times.
He conceded that the economy is likely to face increased inflationary pressures at the end of the year.
“We are likely, probably towards the end of the year, going to have an edging up of inflation, but this is seasonal. We have that problem every year and after that it will get back to the downward trend depending on how we will handle the economy and not the things they are talking about,” Gondwe said.Follow and Subscribe Nyasa TV :