Former finance minister Friday Jumbe have branded as failed government’s monetary policies that were aimed at curbing the rise in inflation and interest rates.
Jumbe disclosed this two years since government reviewed some monetary and fiscal policies to rebuild the country’s depressing economy.
Monetary policies involves managing exchange rate, interest rates, and other issues mainly done by the central bank while the fiscal policies are usually to do with cash handling such as tax organization, collection and allocation.
However, Jumbe has observed that authorities have not performed on monetary policies in that they’ve failed to contain inflation pressure as they were using a wrong formula.
“Reserve Bank has been supplying the market with money time and again in order to improve liquidity and sometimes buying the kwacha in a bid to mop excess liquidity at times as it was trying to address inflation and interest rates rise.
“However inflation and Interest rates are still very high; thereby making Malawi the most difficult place to do business.
“You cannot address inflation by monitoring the money supply only.” Jumbe said.
However, in reaction, the central Bank has rubbished claims that the current monetary policies have failed to make the roadmap of the country’s economic development.
RBM’s spokesperson Mbane Ngwira disagreed with Jumbe’s analysis arguing that the economy is still on track and that all developments are in line with Monetary Policy Committee MPC’s December bulletin.
“It is not true that the economy has lost direction, all the developments on local economy are vindicating the MPC statement.
“That to us is a sign enough that everything remains on track and that all things being equal the economy will stabilize as planned.” Ngwira said.