Mwanamvekha says 5000 Malawi Kwacha banknote will fuel inflation and money laundering

Democratic Progressive Party (DPP) spokesperson on Finance Joseph Mwanamvekha who is also Member of Parliament for Chiradzulu South and a former Finance Minister says the introduction of K5000 Malawi Kwacha banknote has a potential of fueling inflation as well as money laundering in the country
 
Mwanamvekha was speaking this yesterday in Parliament when he was commenting on the introduction of the 5000 Malawi Kwacha banknote.

He said higher currency denominations are associated with economies in hyperinflation and are near collapse.

“Actually, I brought that issue of the new note the 5000 Kwacha because it is a worry for Malawians and indeed me as the spokesperson of DPP on finance, I am saying this because if you look around and do research you find out that countries with higher denominations, whether it’s within the region or in other continents, those are countries that have either economic crisis or their economy is not performing very well.

“In fact, I gave an example of 1990s Zimbabwe scenario, there were higher notes there but they had a reason why they had to issue those currencies. So, that’s why I was asking the minister, are you issuing the currency do we have a problem and from the look of things there’s no any tangible reasons they have introduced the 5000 Kwacha banknote.

“When you have higher currencies you are actually encouraging money laundering as well as tax evasion because it will be much easier for people to keep higher currency like 5000 even 10000. It may be easier for them to carry smaller denominations,” said Mwanamvekha.

In his remarks, Minister of Finance Felix Mlusu said one of the reasons they have introduced 5000 Kwacha banknote is that they want to consolidate the carrying of notes at least to much smaller quantities but of higher value.

He also indicated that the introduction of the 5000 Kwacha banknote does not mean inflation will rise because inflation is an issue to do with demand and supply and people should not worry so much and link it to inflation.

On 23 November 2021, the Reserve Bank of Malawi introduced 5000 kwacha banknote and an upgraded 2000 kwacha banknote. The new banknotes will come into circulation next year on 24 February.

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