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Malawi devalued its currency Kwacha by 25% in a bid to abate inflation and address the severe foreign exchange crisis. Importantly, the government is holding parleys with the IMF for a recovery package.
Malawi devalued its currency Kwacha by 25% in a bid to abate inflation and address the severe foreign exchange crisis. Importantly, the government is holding parleys with the IMF for a recovery package.
The devaluation has taken effect since Yesterday (Friday). Malawi has seen its foreign currency reserves shrink sharply due to excessive imports and a dip in exports. The country has been facing this precarious position for the last six months or so. Kwacha was last devalued in 201 by a meaty 33%. The most recent reason for excessive imports was the ongoing war between Ukraine and Russia.
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https://trendsnafrica.com/malawis-export-income-hit-by-low-returns-for-its-green-gold/
https://trendsnafrica.com/un-to-support-malawi-to-achieve-the-sdgs-and-malawi-2063/
The country has also braved two devastating cyclones in 2022., which had resulted in considerable damages and excessive spending on rehabilitation works. Finance Minister Sosten Gwengwe said that the circumstances forced the country to devalue the currency. A decision towards that was taken some time ago. He said that Kwacha was overvalued and it had an impact on its export competitiveness. Inflation for April was 15.7%, triggered by a rise in food and non-food prices. A number of countries in Africa are staring at creeping inflation, which is having a distortionary impact on their economies.
