Kabambe: We should brace for further devaluation

Former Reserve Bank of Malawi Governor, Dr Dalitso Kabambe said Malawians should expect further depreciation of Malawi Kwacha despite the recent devaluation.

The Reserve Bank of Malawi through the Governor, Dr Wilson T Banda announced a 44% devaluation of Malawi’s currency effective Thursday, 9th November, 2023.

“The Reserve Bank of Malawi (the Bank) wishes to inform the authorized Dealers Banks (ADBs) that the exchange rate has been adjusted from the selling of MWK1180.20 to a selling rate of MWM1700.00 to the US Dollar with effect from 9th November, 2023,” reads release in part.

In a release dated November 8, 2023, Dr Banda said the development has come due to supply-demand imbalance, resurfacing of arbitrage opportunities and spot checks in some market players indicate that the market is able to clear bills at the said rate.

Reacting to the development, Kabambe said there will be no recovery from the macro-economic meltdown saying that it will only make the suffering experienced by Malawians worse, as prices of basic goods such as fuel, fertilizer and food items, will soar.

He said the devaluation is just as reckless as the previous one given that the fundamentals of the Monetary Policy stance remains helpless and fiscal consolidation in nonexistent.

“Looking at the timing of the devaluation, it must be a prior conditionality for the International Monetary Fund (IMF) Extended Credit Facility (ECF). Since K1,700 per US dollar is still below the market equilibrium, we should anticipate further depreciations,” Kabambe said.

Malawi awaits International Monetary Fund to resume an Extended Credit Facility to help fix the ailing economy.

Meanwhile, the government has announced that the Ministry of Finance and Economic Affairs will hold a press conference on Monday to outline the measures that they had put in place to cushion Vulnerable Malawians and stimulate economic growth.

“The press conference will start from 9:00 hours on Monday, 13th November, 2023,” said the secretary to the treasury, Dr Macdonald Mwale.