The Minister of Finance and Economic Affairs Simplex Chithyola Banda has disclosed that the government has outlined a number of measures to cushion poor Malawians from the shocks arising from the recent 44 percent devaluation of the local currency against the United States dollar.
Five days ago, the Reserve Bank of Malawi (RBM) announced a 44% realignment of the kwacha against the dollar, a move the Central Bank said was aimed at correcting supply-demand imbalances in the forex market.
The kwacha fall has triggered sharp rise in the cost of living, especially basic commodities, a situation that is likely going to push the inflation upwards.
Addressing journalists in Lilongwe on Monday morning, Chithyola Banda the Chakwera-led administration appreciates the pain the increase in the cost of living has caused on Malawians, particularly the less privileged citizens.
He said in view of the adverse and un-intended effects of the re-alignment on some sections of the population, President Dr. Lazarus McCarthy Chakwera and his government have already negotiated with development partners such as the World Bank and Multi Donor Trust Fund for adjustments to Social Cash Transfer Programs in order to cushion the poor against the effects of the alignment.
The minister further stated that the government will continue with the implementation of Cyclone Recovery intervention in Blantyre Rural, Thyolo, Phalombe, Chiradzulu, Mulanje, Nsanje, Chikwawa, Balaka, and Zomba Rural targeting 184, 920 households where beneficiary households receive MK150,000 to support with consumption needs and cushion the affected households against the effects of the alignment.
The government will also re-introduce the Price Shock Urban Emergency Cash Transfer Program which will target 105,000 households in Zomba, Blantyre, Mzuzu and Lilongwe city councils. Beneficiaries will receive a once off transfer of MK150, 000 covering a period of 3 months.
“The government has icreased Social Cash Transfer Benefit Levels by 57 percent, which is more than the exchange rate alignment amount. This is with immediate effect. We have increased Social Cash Transfer Beneficiary Coverage from the current 10 percent to 15 percent of the population. From 2 million to 3 million people,” he said.
Chithyola Banda also announced that the government has embarked on consultations with relevant stakeholders to revise the minimum wage, adding that the government will also embark on a similar exercise with respect to public servants.
“The government, with support from development partners, has commenced the recruitment of 2, 741 health workers, such as nurses, doctors, etc. The recruitment process is expected to be completed by 31st July 2024. The government is discussing with foreign governments on skilled labour export. Over 5000 skilled professionals are expected to be recruited under this program. The country is also expected to significantly benefit in terms of foreign currency remittances/foreign currency diversification under this initiative,” he narrated.
He also announced that the government is increasing the Wage Rate for the Climate Smart Public Works Programme (CSPWP) where beneficiaries are currently receiving MK1, 200 for four hours working day for 12 days a month.
Furthermore, the minister said, CSPWP Beneficiary Work Period will be extended by having no breaks between cycles for six months in a year.
“The number of CSPWP beneficiary households has increased immediately from the current 362,450 to 520,000 household’s country wide. The Climate Smart Public Works Program will now be extended to the City Councils to support the participants with their consumption needs. Participants will be engaged in selective works including tree planting.
“Government will immediately engage all Civil Service Trade Unions to review salaries in the public sector and determine how Civil servants can be properly cushioned against the alignment.These are just a few of the aspects of the Action Plan and measures to cushion the vulnerable, but I will make other aspects known when I present Government’s Budget Review Statement to Parliament next week,” said Chithyola Banda.
Meanwhile, the Finance Minister has also announced the Fiscal Police, with support from the Financial Intelligence Agency (FIA) and National Intelligence Service including MDF, will intensify crackdown on all illegal foreign exchange trade in all markets across the country and in boarder areas.
He warned Malawians to resist and report all suspicious incidents of buying or selling of foreign exchange from unregistered vendors.
“Any individual or entity caught engaging in this business without proper registration and authorization will be arrested, prosecuted, and have their foreign exchange impounded according to law. Government wishes to remind the general public that dealing in foreign exchange without authorization or licence from the Reserve Bank of Malawi is illegal under the Exchange Control Act, 1984,” said Chithyola Banda.