Professor of Economics at the Malawi University of Business and Applied Sciences (MUBAS) Dr Betchani Tchereni has welcomed Reserve Bank of Malawi (RBM) move to devalue the local currency by 44 percent arguing it reflects the true market value of the Malawi Kwacha on the ground.
RBM devalued the Malawi Kwacha on Wednesday from K1, 180 to K1, 700 against the United Stated dollar.
Speaking to the media, Professor Tchereni said the Kwacha already trades at 1,880 on the parallel market, adding that the devaluation was necessary and is the only medication to heal our ailing economy.
Already, importers were already accessing the US dollar at 1,880 for them to keep their businesses afloat, something that the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has been making this call for some time to have the local currency devalued.
Government, again, sees devaluation as a panacea to spur the journey to Extended Credit Facility, which if approved, unlocks $180m immediately, besides, it beckons multilateral and bilateral inflows (donor support) in millions of dollars.
However, experts have been quick to advise government to monitor the situation on the ground and, through its spokesperson Moses Kunkuyu, government says it expects the industry and other players not to leverage off this devaluation to the detriment of the poor.
“It is simply normalization of the true value of the currency. Measures will be taken for any unjustified increase of prices for basic needs of people. Notwithstanding, government will cushion any genuine effects of devaluation with interventions including enhanced Social Cash Transfer programs, among others.
“In comparison to after-effects in the very short term and long-term benefits, the latter stands out beneficial to the citizenry and industry,” he said.