Malawi weighs devaluation, needs $1billion to boost economy
Malawi needs $1 billion in aid next year and is weighing devaluing its currency to boost its economy, President Joyce Banda said.
“Our economy is in a state of disaster,” Banda told reporters on Friday in Lilongwe, the capital, adding that the country’s leading manufacturing companies were unable to import raw materials because they lacked the foreign currency to pay. “When we were getting into government, I didn’t know the economy was in such a mess,” she said.
The government is willing to devalue the local currency, the kwacha, in order to meet terms set by the International Monetary Fund and unlock blocked aid flow, Banda said.
Before implementing the measure, the government will seek assurance of aid to the southern African nation to cushion the poor from the effects of devaluation, she said.
Malawi is struggling to ease foreign-currency and fuel shortages as well as win back support from international donors after the former President Bingu wa Mutharika, who died last month, had rejected IMF advice. The country relies on foreign aid for more than 40 percent of its budget.
Malawi, which will host the African Union Summit in July, is concerned it might alienate donors by hosting Sudanese President Umar al-Bashir, who is wanted by the International Criminal Court on charges of genocide.
“Malawi cannot risk to lose donors by hosting al-Bashir,” Banda said. “I have left the issue in the hands of AU to decide.”
Malawi lost about $350.7 million of the U.S. funding meant for its energy sector when it hosted Al Bashir last year during a meeting of the Common Market for Eastern and Southern Africa.
Follow and Subscribe Nyasa TV :
