EU against further Kwacha devaluation

The European Union (EU) is tipping the Malawi government not to further devalue the Kwacha, arguing it is not a solution to the current economic challenges.

Recently, the International Monetary Fund (IMF) indicated that the kwacha was misaligned with some major currencies, hence the need to devalue it once more.

This is despite May’s 25 % devaluation of the currency which was effected in a bid to hold up dwindling foreign exchange reserves and curb inflation.

In his justification, EU Ambassador to Malawi, Rune Skinnebach, has underscored that devaluation does not help since Malawi is more of an importing than exporting nation.

“What we saw with the last devaluation was that it did not solve the problem, it instead increased inflationary pressure and it did increase the hardships of Malawians. To correct this, it needs less of everything to everybody,” highlighted the EU head to Malawi.

Meanwhile, an associate professor of economics from the Malawi University of Business and Applied Sciences-MUBAS Betchani Tchereni suggested the need for Malawi to increase exports as a way of improving the local economy.

“In the medium to long term solutions, it is very important for the country to start to produce and depend on our own commodities,” Tchereni said.

Earlier Reserve Bank of Malawi Governor Wilson Banda responded to what was then circulating in the public sphere of an imminent further devaluation by indicating that as government and they did not hold such plans.

Meanwhile the citizenry continue to experience tough living conditions with the ever increasing cost of living, which has been exacerbated by the devaluation and a rising inflation.