LILONGWE (Malawi NewsNow) —The current sudden sharp depreciation of the Kwacha currency is deliberate fiscal and monetary policy mix as a measure to ensure that farmers get more from their farm produce after selling on dollar currency, Malawi’s Finance and Economic Planning Minister Mr Goodall Gondwe has claimed.
Kwacha currency over the past three weeks, registered a steep depreciation, especially against the United States dollar.
It is selling at K525 to a unit of the dollar in some foreign exchange bureaus, according to the Reserve Bank of Malawi (RBM) published daily foreign exchange bureau rates.
Some authorised dealer banks (ADBs) were selling a dollar at K480 yesterday from around K440 a few weeks ago.
Consumers Association of Malawi (Cama) has expressed concern over the authorities’ failure to put in place lasting measures to halt the slide.
Cama boss Mr John Kapito says the Kwacha free fall is an insult to all Malawians “who have been misled by this DPP government that it will manage the economy and that the fruits will be shared with the rest of the population.”
The Finance Minister has however taken a positive stand backing the depreciation.
“By the way, a very good time for Kwacha depreciation because the farmers are selling their tobacco and they are selling a number of their products which means that if they earn one dollar they will earn more Kwachas, for instance if they were earning 440 for a dollar they will now be earning 460 for a dollar which is fairly good”, says Gondwe.
“Precisely we want the kwacha to depreciate so that people can earn more money that is why am saying its a good time to depreciate, what we have done is to make some policy changes where commercial banks are hoarding on to their dollars, when they are receiving them, they are not spending them, thus what we are doing so that the farmers can earn more from what they sale”, he says.
Gondwe rubbishes critics for saying the economy is crumbling due to poor economic policy.
“To say the economy is not okay now because of the depreciation of the Kwacha thus a political statement, do not worry about it because they don’t know what they are talking about, their political statement shouldn’t be dignified by anything.
“The point is what we have always been saying that the policies in Malawi should be that the currency should depreciate when people are selling their farm produce so that they can get more money from the dollars they get and this is happening now, its a very good thing to be done,” says Gondwe.
Malawi’s economy is predominantly agro-based with tobacco as the major crop accounting for at least 60 percent of total foreign exchange earnings.
The kwacha’s depreciating is happening when tobacco dollars are flowing into the economy. During the lean period for forex, the kwacha stood its ground.