The Ministry of Finance says Economic Policy Reforms which President Joyce Banda’s administration instituted in 2012 in order to resuscitate the country’s economy are yielding positive results.
Among other reforms which government instituted included the introduction of the Economy Recovery Plan (ERP), devaluation of the kwacha by 49 percent and tightening expenditure measures.
This, according to MoF public relations officer, Nations Msowoya has turned around the stagnated economy as evidenced by inflation rate drop to 22 percent, kwacha getting stabilised and having forex inflows.
Said Msowoya: “The devaluation of the kwacha by 49 percent was aimed at ensuring that the kwacha retains its real value as previously, the value of the local currency was artificially trading at a stronger level against foreign currencies such as the dollar,when in essence it was much weaker.As such, this propelled people to resort to hiding foreign exchange in their homes instead of putting it in banks leading to the shortage of fuel and forex.
“Remember airlines like Ethiopia Airways and Kenya Airways were not accepting ticket purchases in kwacha in 2011 due to foreign exchange shortages and all this changed after the devaluation, though it brought some negative effects including increase in prices of commodities.
“Now, the inflation rate has gone down to 22 percent, fuel and foreign exchange is now available that makes companies to import their raw materials easily reflecting strong growth in the private sector.”
He further said, “these economic policy reforms have not even spared the Electricity Supply Corporation of Malawi and Water Boards which are also registering profits.”
On his part, Indigenous Business Association of Malawi (Ibam) president, Mike Mlombwa concurred with Msowoya that economic policy reforms that have also seen stabilisation of the kwacha are registering positive results but described the change as short lived.
“Of course, fuel, forex is available almost everywhere and companies are making profits because of various economic policies that were instituted two years ago, however, these are just temporal changes.
“First of all, you must understand that these reforms are only benefiting foreign investors at the expense of local businesses as it is supposed to be. In addition, currently many banks are busy buying and keeping forex waiting to sell it at a higher price when the country’s economy overturns again,” said Mlombwa.