Malawi Kwacha devalution ‘short-term solution’ to recovery- JB
President Joyce Banda said her decision to devalue the country’s currency, the kwacha, by 40 percent was a short-term solution to economic revival .
Speaking at a fundraising event for hunger affected households organized by the Presidential Initiative on Poverty and Hunger Reduction at the New State House in Lilongwe, Banda said the time she ascended to power in April she found the country at the age of collapse.
She said the economy was in tatters and she had no any other option, but to inject economic recovery reforms that would help to bring the economy back on track.
The President cited devaluation of the Kwacha as the short term solution that she opted to fasten growth of the country’s economy.
“You will be aware that I took office at a very critical time, our economy was underperforming, looking at the responsibility that I have to serve the interest of Malawians, with the help of the International Monetary Fund (IMF) I decided to devalue the Kwacha.
“I was aware of the negative impact this would bring to the life of the poor people, but that was the only option,” she said.
President Banda added that from the time the Kwacha was devalued the IMF has assisted the country with US$ 308 million.
Furthermore, the President said: “Devaluing of the Kwacha was not the only thing I did; I also restored relationship with donors and neighbouring countries. You know in life you cannot stand on your own and thinking that you will do everything by yourself without a help of others.”
But consumer rights activist John Kapito argues that it was not wrong for government to devalue the kwacha, saying the authorities did not understand the implications of the move, thereby failed to put in place mechanisms of mitigating the effects of such action.
Kapito said Malawi needs a good economic and social package that cushions poor Malawians with low wages, including the unemployed from both urban and rural areas.
He also said there is need for the country’s leadership to re-engage the International Monetary Fund (IMF), the World Bank and various players for a more realistic economic recovery plan that could take care of the interests of the poor.
“The structure of the Malawi economy is so different from the other developing countries and the current economic recovery model plan is a suicide political dosage for the current leadership. Unfortunately, both IMF and World Bank are good at showing the road to the graveyard and not the way out,” Kapito is on record saying.
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