Malawi Kwacha will continue to depreciate against major currencies due to the delayed resumption of the International Monetary Fund’s Extended Credit Facility Programme, economists have warned.
The ECF package was only approved on July 23 this year, after the programme went off track in Malawi, on grounds of poor governance and bad policies during the former Bingu wa Mutharika administration.
The National Bank of Malawi economist Shadreck Malenga stresses that the Kwacha will continue to suffer on the world market before it becomes stable.
Malenga cites the withdraw of most farmers from 2012 tobacco growing season due to lower prices in 2011 as another contributing factor to the poor performance of the Malawi currency.
Another economic commentator Mavuto Bamusi also told the Malawi News Agency that the free floating system of the Kwacha and fuel prices is also making it hard for the Kwacha to withstand other foreign currencies, hence crippling the economy.
On his part, the Minister of Finance Ken Lipenga says the foundation for the current problem was laid sometime back, hence the need to persevere and for donors to come in and assist.
According to the National Bank of Malawi report for the month of September, the 2012 tobacco season has recorded low volumes with 79.822 million kilogrammes of tobacco sold, compared to over 237 million kilogrammes sold in 2011.
The tobacco auction period has been the shortest on record lasting only 20 weeks, less than 41 weeks in the 2011 season.