President Peter Mutharika has commented on the free fall of the country’s currency, the Kwacha, saying it was over-priced and it is currently depreciating to its true value.
Mutharika said in an interview with the Voice of America (VOA) that the kwacha is further weakened by a weak export base.
“Part of the problem is a weak export base and the other currencies are strong, and in a way I think the kwacha over appreciated anyway, so it is probably depreciating to its normal level,” VOA quoted Mutharika as saying.
“But in the long term, I would like us to increase our exports and cut back on spending, and I hope that we would be able to get back to where we should be,” said Mutharika.
Malawi is currently experiencing bad economic environment characterised by high inflation rate at 23 percent as of August 2015, according to National Statistical Office (NSO), high interest rates in commercial banks, hovering around 37 percent as well as a downgraded gross domestic product (GDP) growth rate of three percent this year from an earlier projection of 5.5 percent.
A fortnight ago, an International Monetary Fund (IMF) mission to Malawi declared the country’s three-year Extended Credit Facility (ECF) off-track due to fiscal slippages equivalent to about two percent of GDP, which emerged during the second half of 2014/15 financial year, in part because of overspending on the wage bill.
But Mutharika said his government is working on modalities to bring the economy back on track and outlined some of the measures his government is taking such as restricting local and international travel for all government officials; the measure which he said will save the government about $20 million.
President Mutharika also refuted a report by the African Review, a publication based in Kenya, which named him among the top 10 African presidents with high salary compared to the gross domestic product (GDP) of their countries.
“My salary is 1.5 million kwacha [per month] and is even less than most of the civil servants. It is certainly less than the governor of the central bank and the CEO of the Malawi Revenue Authority. It is not that much, I think … it comes to about $3 000 [per month] at the current exchange rate,” said Mutharika.
“We are not taking the [increased] money, both me and the vice president and Cabinet ministers. We are saying we are not going to take the salary until the economy improves. “
Mutharika also expressed optimism that the Public Service Reforms which government is implementing will help weed out corruption by ensuring accountability and preventing financial malfeasance in the country.
The Malawi leader said his stance is zero tolerance for corruption, adding that he wants to restore a culture of accountability.
Donor support, which accounts for nearly 40 percent of the country’s budget, has been withdrawn after officials were accused of stealing millions of dollars in public funds.Follow and Subscribe Nyasa TV :