Public Affairs Committee (PAC) – Malawi’s most influential quasi-religious body – has backed the decision the government took to devalue the Malawi kwacha in order to align it with the United States (US) dollar.
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But PAC Chairperson Monsignor Patrick Thawale has asked President Dr. Lazarus McCarthy Chakwera and his administration to come up with tangible measures for cushioning poor Malawians against the shocks the kwacha alignment has brought.
Thawale made the remarks on Tuesday when the delegation during interface meeting with the State President of the Republic of Malawi, DR. Lazarus McCarthy Chakwera, at the Kamuzu Palace in Lilongwe.
He said PAC believes that that the alignment of the local currency to major trading currencies will help to combat a trade imbalance and have exports exceed imports.
“Many economic commentators have made observations on the current economic situation. Your Excellency, this remains an elephant in the room in Malawi. We will not go round and round but make observations on the recent devaluation of 44 percent. Let us be clear at the outset that PAC is not against any devaluation,” he said.
“Previous governments in Malawi have devalued the Malawi kwacha. So, for us, we do not condemn devaluation as such. We are aware that the popular view is that by devaluing Malawi’s currency, this country makes its money cheaper and boosts exports, rendering them more competitive in the global market. Conversely, foreign products become more expensive, so the demand for imports falls. As such, Your Excellency, Governments use devaluation to combat a trade imbalance and have exports exceed imports. We congratulate Your Excellency for making such a bold decision following negotiations with International Monetary Fund (IMF),” he added.
But Thawale was quick to point out the need to put in place measures for alleviating the shocks Malawians are expected to experience due to the devaluation.
He said PAC is concerned with the negative impact on the livelihood of Malawians caused by the 44 percent.
“Already when the government devalued currency by 25 percent last year, the impact on rural Malawians was big. Now with 44 percent more suffering is expected among majority of Malawians. We believe tough decisions should have been made earlier, in fact when you assumed office. On the contrary, Your Excellency, domestic borrowing, international travels by state officials including yourself, and failure in general to tighten fiscal policies became order of the day. Your Excellency, it is time your government worked on a strategy to stop importation of non-essential commodities following the current economic turmoil we face. We believe these and other aspects would contribute to turning around of our economy,” said Thawale.
On his return from the Fifth Saudi-Africa Summit, President Chakwera outlined a number of measures his government has devised to cushion poor Malawians from the economic shocks occasioned by the 44 percent devaluation of the local currency against the dollar.
Among others, the President announced that the government would increase the number of beneficiaries in the Social Cash Transfer Programme by 57 percent, which is more than the exchange rate alignment amount.
The government also increased increased Social Cash Transfer Beneficiary coverage from the current 10 percent to 15 percent of the population, thus from two million to three million people.
President Chakwera also announced suspension of his international trips until March 2024 to save resources, which can be invested in areas of public good.
