Former Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe says Malawi’s economy will not recover despite the recent devaluation and Malawians should expect further devaluations under President Lazarus Chakwera’s administration.
Kabambe has said this in a statement today, hours after the Reserve Bank of Malawi (RBM) devalued the Malawi Kwacha from K1,180 to K1,700 against the dollar.
According to Kabambe, the new exchange rate does not resolve forex shortage challenges Malawi has been facing and has only been implemented to satisfy THE International Monetary Fund which is expected to make a decision next week on the Extended Facility Credit (ECF) with Malawi.
“Since K1700/$ is still below the market equilibrium, we should anticipate further depreciations,” said Kabambe.
Kabambe has also described the devaluation as reckless just like the 25 percent devaluation implemented in May last year, saying the “fundamentals of the monetary policy stance remain helpless and fiscal consolidation is non-existent.”
He said: There will be no recovery from the economic meltdown. It will only make the suffering experienced by Malawians worse, as prices of basic goods and services such as fuel, fertilizer and food items will soar.”
In his statement yesterday, RBM Governor Wilson Banda claimed that spot checks conducted by the RBM indicate that the markets “is able to clear bills” at the new exchange rate.
The devaluationWAS implemented on the same day President Lazarus Chakwera flew to Saudi Arabia to sign an agreement for a K22 billion loan which will be used for construction of Mangochi-Makanjira Road.