Mwanamveka accuses Tonse Government for creating Forex crisis

By Antony Isaiah Jr

The former minister of finance, Joseph Mwanamveka has accused the incumbent government, Tonse Alliance for creating the current crisis of forex which has led to the hiking of prices of commodities in the country.

Speaking through a statement the he released on Thursday, Mwanamveka said the reports that has been said about the shortage of the forex are not true and he describes it as misreporting and misinformation.

Mwanamveka said it is surprising that the Chakwera’s led government would like to always blame the past regime for mess that they have created in the last two years.

“In many instances, the tonse government has resorted to blaming the DPP Administration on the shortage of forex. It has always been my wish not to comment on such issues because our president His Excellency, Prof Arthur Peter Mutharika advised us not to interfere on how this government is managing the economy and foreign exchange.

“The fact of the matter is that the DPP led government managed the economy very we and this is o record, and that empirical statistics and evidence is available to confirm this fact. All macroeconomic fundamentals were stable and on a decline trajectory.

“Inflation dropped from 30% to a single digit Inflation also dropped from over 30% to an average of 12% and exchange rate remained stable for over three years. Import cover hovered between 4 to 5 months from.less than a month when we took over in 2004. In all this summed up in improving people per capital income and well-being of Malawians, ” said Mwanamveka.

Mwanamveka said Malawi is facing shortage of forex under tonse alliance Administration due to increase of AIP beneficiaries, cancellation of IMF’s Extended Credit Facility by the Tonse Government, failure to negotiate with local cooking oil manufacturers and resultant issuance of importation licences for cooking oil to many players, unfavourable tobacco a d other export proceeds, government decision to be importing fuel on CIF and Crude Oil jumped globally from around $60 per barrel in 2018 to about $12e in 2022 thereby doubting Malawi’s fuel import bill.

“Increase of AIP beneficiaries from 900,000 (90,000 MT) to 4,700, 000 (470,000MT) translating a whooping and astronomical jump of importation of fertilizer importation bill to 160 Billion Kwacha this translates to an increase of the country’s fertilizer import bill from $46 million to $213 million.

“Cancellation of IMF’s Extended Credit Facility by Tonse Administration which led Malawi to lose $101 million which was already negotiated by the DPP led government. One would have expected that the Tonse government would have continued with the programme while negotiating a new facility to allow a seamless transition into a new programme. Malawians would want to know that this programme as the end of our tenure the programme was on track as observed by the First Deputy Managing Director Mr. David Lipton, and Acting Chair, who stated:

“(Despite large reconstruction and balance of payments needs following Cyclone Idai Malawi’s ECF program performance has been satisfactory. Program-supported structural reforms advanced, addressing several important gaps that had previously been identified in public financial management. All quantitative performance criteria were met…”.

“Failure to negotiate with local cooking oil manufacturers and resultant issuance of importation licenses for cooking oil to many players meant a lot of foreign exchange leaving the country hence exporting jobs elsewhere and depleting our meagre foreign exchange reserves. Further to this, we understand that now Tonse administration wants to give more fuel importation licenses which may deplete further our foreign exchange reserves. Really, should DPP be blamed for this?

“Unfavorable tobacco and other export proceeds. You may be aware recently Malawi as a country failed to realize good returns on tobacco which happens to be our main forex earner and cotton proceeds have not been good either. This means that Malawi failed to realize US dollars which could have been used to cushion foreign exchange reserves as it has been in the past hence contributing to the scarcity of the foreign exchange.

“Government decision to be importing fuel on CIF (Cost of fuel+ Insurance + Freight) thus government paying to the suppliers for fuel, insurance and freight in US dollars instead of buying fuel only in US dollars and arrange the insurance and freight locally which will be paid in Malawi kwacha. Basically, instead of using local transporters and insurers, we are now exporting jobs to foreigners.

“Crude oil globally jumped from around $60 per barrel in 2019 to about $123 in 2022 thereby doubling our fuel import bill. Malawians may wish to know that the demand for fuel in Malawi is inelastic hence the demand for fuel is not affected by the increase in price,” said Mwanamveka.