A renowned economic expert has advised government against calls to devalue kwacha, saying the move will not solve economic challenges Malawi is facing such as forex supply.
The sentiments from Hopkins Kawaye-an economic expert-come as Malawi continue to face pressure to devalue the Kwacha to align the foreign exchange supply with micro-economic fundamentals, with the recent call coming from US Ambassador David Young.
Speaking to MIJ Online, Kawaye has however disputed the call saying Malawi as a predominantly importing economy has not benefitted from past devaluations but rather the decisions only pushed more people into poverty.
“We have been devaluing the Kwacha for a number of times now but it seems like it’s not solving the problem, if we devalue the Kwacha it means whatever we will be importing from other countries will attract higher prices.
The income of Malawians is not changing while price of commodities are increasing”. Kawaye said
He has since advised authorities to focus on measures aimed at improving forex generation through import substitutions and increasing exports.
In May 2022, Malawi devalued Kwacha by 25 percent in a move Reserve Bank said will help to align the foreign exchange supply to the macroeconomic fundamentals. Furthermore on May 7 2012, the country also devalued the local currency by 49 percent, commencing a floated exchange regime as the currency was liberalized to allow forces of demand and supply to interplay.