Economists have said newly appointed Reserve Bank of Malawi (RBM) Governor MacDonald Mafuta Mwale has a difficult job of stabilising prices and the exchange rate, a task the new broom acknowledges and says he is geared.
President Lazarus Chakwera appointed Mafuta Mwale on Monday, subject to approval by the Public Appointments Committee of Parliament.
He takes over the mantle at a time of prevailing high inflation rate at 27 percent, exchange rate instability and missteps in currency revaluation.
Speaking in an interview yesterday, Mafuta Mwale said his focus will be on monetary policy that will incentivise the private sector to produce and gradually reduce the control approach as the economy responds.
He said Malawi’s problem is that of limited capacity to produce and export to earn foreign exchange.
Said Mafuta-Mwale: “This definitely implies the need for engagement based on solid projections of outcomes.
“Monetary policy is largely to do with demand management, but let’s face it, this has limited scope of success if not fully supported by supply boosting initiatives.”
He said that shortly, he will start working with a selected category of stakeholders whose efforts can have a direct bearing on inflation management and forex generation.
In an interview on Monday,
Scotland-based economist Velli Nyirongo said a crucial task for the new governor will be working to re-align fiscal and monetary policies to ensure a more cohesive approach to economic management.
He said Mafuta Mwale’s background in monetary regulation positions him to address these pressing issues with a focus on stability and reform.
Said Nyirongo: “Inflation management will be a critical priority. A crucial task for him will be working to re-align fiscal and monetary policy to ensure a more cohesive approach to economic management.”
However, he said while the alignment is vital for addressing systemic issues, it will require close collaboration with fiscal authorities and may take time to yield significant results.
On his part, economist Bond Mtembezeka said if Mafuta Mwale is to succeed in this challenging role, he needs to be tactical, strategic and deliberate in his efforts.
“He has a good profile, he knows the in and out of the bank having been with it for decades and under different political regimes,” he said.
Mtembezeka , who is Business Partners International count r y manager, said Mafuta Mwale needs to understand that the conventional way of running a central bank and tools at its disposal have proven to be inefficacious.
Speaking separately, Mzuzu University-based economist Christipher Mbukwa described the appointment of Mafuta Mwale as safe.
“The President cannot afford to bring someone from the outside at this juncture when the central bank is implementing a tight monetary policy to mitigate the heightened inflation,” he said.
RBM has in recent years stuck to a tight monetary policy that has translated into high interest rates and subsequent increased cost of borrowing.
The central bank has maintained that tightening the monetary policy, an economic policy that manages the size and growth rate of the money supply in an economy.
Despite that, inflation has continued to rise and is currently at 27 percent.
Mafuta Mwale, who until his appointment was deputy governor, replaces Wilson Banda, who was reportedly fired by Chakwera last Friday.
