President Dr Lazarus McCarthy Chakwera has commended International Monetay Fund (IMF) for the approval of $174 Million Extended Credit Facility (ECF) saying the facility will will unlock many economic opportunities.
“An hour ago, the Board of the International Monetary Fund approved the Extended Credit Facility to Malawi that we have been negotiating for the past two years. Under this facility, Malawi will receive an injection of 174 million dollars over the next four years, as well as the resumption of direct budget support from international partners after a 10 year absence because of Cashgate and the financial mismanagement of the previous administration,” he said.
The president said the benefits of this IMF Program are many saying will help unlock foreign direct investments into the country.
“First, the IMF approval will unlock foreign direct investments into the country to strengthen productivity. For example, as a result of our qualification for this IMF Program, several development partners have already lined up a number of financial facilities that will boost the supply of foreign exchange in our banks,” he said.
The support includes the World Bank’s US$60 million Trade Finance Facility that will assist domestic banks to support importation of strategic commodities like fertilizer, pharmaceuticals and industrial raw materials.
“It also includes the World Bank’s 217 million dollar package in response to the fiscal reforms we have implemented, one third of which will be made available immediately. It also includes 250 million dollars from the World Bank for the Agricultural Commercialisation Project, ” he said.
Malawi President Dr Lazarus McCarthy Chakwera on Wednesday unpacked measures on how his Government will cushion Malawians following the 44 percent devaluation.
The president directed his Cabinet to cancel all foreign trips and that those who are abroad should return with immediate effect.
In a special address to the nation, Chakwera said he has also personally cancelled all presidential foreign travels until the end of the financial year including the Cop 28 which was due to take place in Dubai.
President Chakwera
President Dr Chakwera has made further directives as austerity measures directing to have fuel allocation for ministers and different government officials be cut by half.
The president has also directed Ministry of Finance to include cushioning measures to small and medium enterprises (SMEs) to avoid job losses as well as increase salaries for public and civil servants as well as revising the PAYEE inorder to help Malawians.
The president has further ordered Ministry of finance and Trade in conjuction with fair trade authority to investigate price raising without following stipulated laws.
Finally the president has stopped raising of water and electricity tariffs effected by the government’s parastatals and transfer the same to the operations of the board.
“Those who made the economy suffer like this will be dealt with accordingly,” he said.
The president assured Malawians that Malawi will never be the same since Board of International Monetay Fund (IMF) has given Malawi the much awaited facility.
President Dr. Lazarus McCarthy Chakwera has congratulated Reverend Father Vincent Fredrick Mwakhwawa following his appointment as Auxiliary Bishop of Lilongwe Archdiocese.
Communication from the Episcopal Conference of Malawi released on Wednesday 15th November 2023 confirmed the appointed Reverend Father Mwakhwawa as the Auxiliary Bishop of Lilongwe Archdiocese by Pope Francis. Until his appointment, Father Mwakhwawa was Vicar General of the Lilongwe Diocese.
In a statement, Chakwera said he is confident that the guidance of Fr. Mwakhwawa will significantly impact the spiritual growth of Malawi nation
Rev Father Vincent Fredrick Mwakhwawa
“The first lady and I extend our heartfelt congratulations to Reverend Father Vincent Fredrick Mwakhwawa on becoming the Auxiliary Bishop of the Archdiocese of Lilongwe. His exceptional dedication demonstrated through his roles as Vicar General, National Director of Pontifical Mission Societies and Parish Administrator of Our Lady of Africa Maula Cathedral showcases his remarkable leadership,” reads part of the statement.
“Our prayers are with the bishop elect and may God’s grace continue to guide and inspire him in this significant chapter of his journey.”
National Bank of Malawi (NBM) Plc has supported the Malawi Orthopaedic Association’s National Emergency Trauma Consultative Forum with K5 million as they discuss formulating a guiding policy document on emergency and trauma care in Malawi.
Henderson Street Service Centre Manager Tamara Mtuwa, who represented NBM Plc during the cheque handover ceremony said by partnering with the association, the Bank aims to engrain its bond with the medical community further and showcase a staunch commitment to the highest standards of community welfare and advancement.
“We are here to declare our unwavering support for the mission of the Malawi Orthopedic Association and the vital efforts to advance emergency trauma and orthopedic care in our nation. It gives me immense pleasure to announce our sponsorship of K5 million. This is not just a financial commitment but a testament to our enduring partnership and our shared vision for a safer, healthier, and more prosperous Malawi.”
“Through active participation and interactions, we anticipate to emphasize our financial expertise tailored to meet the distinctive needs of the medical community,” said Mtuwa.
The association’s patron, who is also a Professor of Orthopedics at Kamuzu University of Health Sciences (KUHeS), Nyengo Mkandawire thanked National Bank for supporting the forum.
“We believe the forum is vital because, at the National level we need a guiding policy document on emergency and trauma care, there are currently some documents that guide us in this aspect but they are not comprehensive and all-inclusive. This consultative meeting will bring together all stakeholders involved in trauma care,” he said.
The meeting will take place on November 15 and 16 in Lilongwe.
In retrospect, the resurfacing of the clip featuring the late President Bingu wa Mutharika’s denouncement of the Kwacha devaluation serves as a reminder of a pivotal moment in Malawi’s economic history.
Mutharika’s steadfast resistance to the devaluation, despite pressure from international financial institutions, painted him as a leader who stood against what he perceived as detrimental economic policies.
The fallout with the Bretton Woods Institutions, particularly the International Monetary Fund (IMF), and the subsequent loss of the Extended Credit Facility (ECF) in 2012 marked a turning point. Mutharika’s decision to hold firm on the Kwacha’s value, despite the glaring disparity between official rates and the black market, reflected his determination to maintain economic sovereignty.
However, the stark contrast between official and black market exchange rates foreshadowed the challenges ahead. The black market rate nearly doubled, reaching 295 Kwacha to the dollar just before Mutharika’s passing. This period unleashed a tumultuous phase in Malawi’s economic landscape, marked by policy shifts and ensuing hardships. Mutharika’s unwavering stance had consequences that reverberated across the nation. The severe economic downturn that followed plunged Malawi into its most challenging and worst financial crisis. Essential resources like fuel, pharmaceuticals and basic commodities faced shortages, crippling the market and causing distress among Malawians. There were long queues on service stations, in shops and many other places where goods and services are sold.
The turning point came with the sudden passing of President Mutharika in April 2012, leading to Joyce Banda assuming office. In a strategic move to address the economic challenges and unlock the suspended US$79 million credit facility from the IMF, Banda made the tough decision to devalue the Kwacha by approximately 33 percent. President Banda’s willingness to bow down to international pressure and implement a significant economic policy shift demonstrated a pragmatic approach to address the country’s economic woes. While this move may have been seen as a necessary compromise, it was a critical step in stabilising the economy and regaining access to much-needed financial support.
The juxtaposition of Mutharika’s firm stance against devaluation and the subsequent economic downturn with President Banda’s pragmatic approach highlights the complexities of navigating international financial pressures while safeguarding a nation’s economic stability. The resurfaced clip serves as a historical marker, prompting reflection on the choices leaders make in the face of economic challenges and the lasting impact on their countries.
However, truth be told, Malawi has a fragile economy which cannot claim sovereignty to the International support especially from the IMF. A country such as Malawi securing the ECF demonstrates international confidence in economic policies. The credit facility acts as an endorsement, which improves donor and investor confidence, making it easier for Malawi to attract direct budgetary support as well as foreign investment. It should also be acknowledged that the immediate impact of devaluation can be severe on the livelihood of citizens because it initially leads to high cost of basic commodities and services, but the end game is that it spurs economic growth.
In light of this devaluation, it is surprising that traders have hastily raised commodity prices, considering that the Reserve Bank of Malawi has merely realigned the Kwacha to its market value. Mr. Hendrix Laher, Managing Director of Luthando Holdings, contends in his write circulating on social media, that traders were already importing at the rate of K1,880 to a dollar, rendering the price increase unjustified. Laher recounts a conversation with a fellow trader who justified the 44 percent price hike, claiming that Malawians would attribute the blame to the government and not the entrepreneurs.
Writes Mr. Laher in part: I told him Malawians are so poor and misinformed. I would not dupe this vulnerable human being. I will not be at peace with the poor man’s money, so no.” I wish we could all borrow a leaf from Mr. Laher. We shall find no peace if we take advantage of this unavoidable evil called devaluation to dupe innocent poor Malawians.
