Malawi Economic Justice Network (Mejn) executive director Bertha Phiri has urged authorities to develop clear economic recovery plans ahead of the new financial year set to start on April 1.
In an interview last week, she said there is need to leave the kwacha float and trade at its market value.
Said Phiri: “The kwacha should be freed so that it finds its equilibrium.
“Ministry of Finance and Economic Affairs should be clear on economic recovery plan because the economy is still not ticking.”
In an interview on Thursday, Economics Association of Malawi president Bertha Bangara-Chikadza blamed the current exchange rate situation on greed and speculation which have led to the parallel market rate distortion.
She said: “Remember that when we were devaluing the kwacha by 44 percent in November 2023, we wanted to close the gap between the official exchange rate and parallel market.
“But what happened? The parallel market exchange rate started shifting again and it is now reportedly at K4 000 per dollar, a cumulative loss in value of the 130 percent within one year.”
Bangara-Chikadza said it is illogical and futile to keep following the parallel market rates because “we will be chasing a moving target without any accompanying benefits, but sharp increases in prices and, therefore, inflation”.
The sentiments come days after Financial Market Dealers Association (Fimda) president Leslie Fatch told a Reserve Bank of Malawi (RBM) Monetary Policy Technical Forum to align the exchange rate whose spread between official and parallel rates is widening.
Meanwhile, Mzuzu University-based economics lecturer Christopher Mbukwa fears that aligning the currency could only worsen the economic situation because the country is not exporting.
He said: “We still have weak export earnings flows as such aligning may not guarantee stable currency.
“There is no way we can be using the black market as a yardstick.
RBM director of financial markets Chakudza Linje, when responding to such exchange rate issues, said the past devaluations in 2022 and 2023 indicate that any alignments would not solve the exchange rate issues.
Malawi devalued the kwacha by 25 percent in 2022 and by 44 percent in 2023. The current official rate is K1751 per dollar.
