Malawi President Bingu wa Mutharika is insisting that country’s currency, the Kwacha will not be devalued as demanded by the International Monetary Fund (IMF) and poked fun at Brettonwood institutions.
Mutharika, an Indian trained economicst said on Sarurday on remarks aired live on state radio and television that devaluation “does not make sense(and) it will not assist Malawi economy” saying he will not allow it to happen because “someone in Washington has eaten too much beans.”
IMF Headquarters is located in the heart of the commercial district of Washington, D.C. in United States of America.
The President said he was protecting the impoverished Malawians “from commodity price rises” if the Kwacha was left to be devalued against major currencies, saying only the righ and some Asians business persons would reap the benefits of the devaluation.
He said “ the youths who have no jobs and the poor in the villages will be made poorer.”
“ We can’t devalue the Kwacha simply because someone in Washington has eaten too much beans,” Mutharika said., adding “If they smile in Washington, we will be weeping here. I will not devalue to safeguard you Malawians.”
IMF advised Malawi to devalue the official exchange rate further to between 230 to 250 against the dollar to address a foreign exchange shortage and stem a thriving black market, .
Malawi devalued the kwacha by 10% in August, but at 166 kwacha to the dollar, the official rate is not as attractive as the black market rate of between 240 and 250 kwacha.
The IMF said the overvalued exchange rate has led to foreign exchange market rationing and multiple exchange rates which are key deterrents to private sector activity and diversification.
“The objective of the devaluation is to remove some of the demand for foreign exchange by putting the price for foreign exchange to a more market-determined level,” the IMF said in a memo after its visit to Malawi in December.