Malawi Govt urged to check its expenditures to sustain Kwacha’s strength
Malawi Government needs to critically check its uncontrolled expenditures if the appreciation of the kwacha against its major currencies, mainly the United States Dollar, is to be sustained so that it does not fall again quickly.
Over the last few days, the Malawi Kwacha has appreciated against the US dollar trading at around K380 on average from K420 in what is believed to be the steady inflows from the tobacco sales, the country’s main foreign exchange earner which accounts for more than half of all foreign exchange earnings.
But Member of Parliament for Balaka South, George Nnesa, making a contribution during a ‘Sunday Round Table discussion’ on Capital radio under the theme ‘the current appreciation of the kwacha on the market’, said the Joyce Banda adminstartion should not give economic recovery plan any credit to the Kwacha’s current strength.
Nnesa said on Sunday during the programe that the appreciation of the kwacha on the market is not due to government policies but the fact that this is tobacco selling season where Malawi is experiencing a lot of foreign currencies into the country.
“I don’t think government should be proud to say its policies are making the kwacha to be where it is today. But we should be aware that this is tobacco selling season where a lot of foreign currency is realised through that,” said Mnesa, who is also President of MAFUNDE.
Thom Khanje, business journalist working for Blantyre Newspapers Limited (BNL Times), said the appreciation of the local currency will mean nothing if government does not control its expenditure which is one way of sustain the Kwacha’s appreciation.
The Editor for Business Times said he was “delighted” that the kwacha was able to stand against the dollar but for that to continue, he pointed out that there was need for government to seriously examine its expenditures.
“First of all let me say that am happy to note that our kwacha is able to stand against its major currency like the dollar. This shows that some government policies are working and promise to bear some fruits.
“But my plea to the government is that government should indeed spend the same money that was budgeted unlike to spend more than what was budgeted for,” he said.
“The problem is that when the budget exceeds, government will also need to borrow other money from, let’s say the Reserve Bank of Malawi, which will likely give out the money just to please government officials though the bank might not have that money.
“In the end, RBM will have no money and will go to other banks to borrow which will see the percentage rate in banks go up and that will affect small business to have an access of loan from the banks to due to higher percentage rates.
“And I don’t see or expect business people to reduce prices of products but I expect that through the appreciation of the kwacha on the market, companies will gain value and should be able to consider their employees in terms of salaries that they are able to survive on the cost of living,” added Khanje.
During the debate, the panelists urged Malawians to plant more of coffee, tea and other crops in large volumes so as to enhance the income of the foreign currencies during their sales into the country.
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