Never say doom, devaluation not automatic -Ligoya
Reserve Bank of Malawi (RBM) Governor Dr Perks Ligoya says there is no need to press the panic button for Malawians over devaluation of the Kwacha currency, saying it will not be done imminently.
Ligoya had disclosed that the International Monetary Fund (IMF) “high powered team” will be coming in the country from December 1 to 12 to help reform the exchange rate.
No panic
But the central bank boss said Saturday on Zodiak Broadcasting Servicesthat Malawi government will not be forced to devalue the currency, saying such a decision will be taken after balancing all economic facts.
“It is not conclusive that when the IMF people are in town there will be devaluation. I don’t want to send the whole country under panic,” said the central bank governor.
IMF wants Malawi to further devalue the Kwacha and liberalise foreign exchange before resuming the country’s Extended Credit Facility and cushion the foreign exchange shortages.
Malawi devalued its currency by 10 percent in August this year.
Ligoya had earlier told Capital FM that the official exchange rate Kwacha is trading at 168 to a US Dollar. The Kwacha has been trading at K150 to a dollar for many years.
The Governor said at the parallel market, the Kwacha is trading at 230 to a US Dollar.
“The decision to devalue or not to devalue has not been made as of yet,” said Ligoya.
He said IMF team is coming to Malawi “to assist us to plan ahead.”
Ligoya said “it will be up to government” to consider devaluation.
“It’s not for them to come and say or dictate as other people fear,” pointed out the Reserve Bank Governor.
“Together we will prepare a report that we will submit to the authorities, so it is at that juncture that we will know whether they will be devaluation or not,” he said
Ligoya urged Malawians “not to panic.”
He said: “The message is do not panic, we are studying the situation. This is why we have called the IMF to sit down with them. We will be consulting, Malawians.
“We will look at all other factors whether the time is opportune to move that way. It is not only the monetary side of the economy that is important we have to look at the impact.”
Donor aid resumption
Ligoya said government is making strides to get all the donors open their aid taps for Malawi by end of the year.
“The solution will start with our negotiation with the IMF; most of the donors require that we have a programme running with IMF that is when they are to disburse their support,” he said the Governor/
“Come end of year and going into 2012 all our donors will be back in Malawi to assist us,” the RBM boss said.
He pointed out that donors have not completely abandoned Malawi as they are still disbursing their support.
Never say die
Ligoya said he was confident that with the “vision” of President Bingu wa Mutharika, an economist himself, Malawi will get an economic recovery.
He said the all over world, countries are facing economic recession, saying “we should not live our lives in isolation, even big countries; developed countries are going through hard times.
“We should not expect Malawi to have easy. People tend to think that Malawi is doomed.”
Ligoya added: “We have a leader that is visionary in President Professor Ngwazi Bingu wa Mutharika. We will interpret that vision into reality.”
He said Mutharika has assemble an economic management team is capable of coming out of the current crisis.
Ligoya said there is “good will” for the cooperating partners like IMF, World Bank, European Union to help Malawi’s ailing economy to recover.
“Never say doom, never say die,” upbeat Ligoya said.
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