By Chisomo Phiri
Former Reserve Bank of Malawi Governor Dalitso Kabambe has described Wednesday’s 44 percent Malawi Kwacha devaluation as reckless.
According to Kabambe, there will be no recovery from the macroeconomic meltdown in the aftermath of the devaluation.
He says the devaluation 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.
Kabambe says looking at the timing of the devaluation, it must be a prior conditionality for International Monetary Fund (IMF) Extended Credit Facility (ECF).
“Since K1,700 per dollar is still below the market equilibrium, we should anticipate further depreciations,” says Kabambe.
According to former RBM governor, Malawians should expect further depreciations of the kwacha as the K1 700 to a dollar exchange rate is still below the “market equilibrium”.
“Furthermore, the devaluation is reckless as the previous one given that the fundamentals of the monetary policy remain helpless and the fiscal consolidation non-existent,”adds Kabambe.
In a statement on Wednesday night, RBM Governor Wilson Banda said the 44 percent devaluation follows the imbalances as well as the mismatch in the exchange rate in cash and telegraphic transfer.
The kwacha was also devalued by 25 percent in May 2022 and since January this year, the local unit has depreciated by 13.1 percent.
