Minister of Finance and Economic Affairs Simplex Chithyola Banda says government will immediately engage all Civil Service Trade Unions to review salaries in the public sector and determine how Civil servants can be properly cushioned against the alignment.
Chithyola Banda revealed this earlier on Monday in Lilongwe as he was addressing the media on measures which government has put in place to cushion vulnerable Malawians following the recent 44% devaluation of the local currency against the US Dollar.
“Five days ago, the Reserve Bank of Malawi announced a 44% realignment of the Kwacha against the dollar to correct supply-demand imbalances in the forex market,” Chitchola opened the briefing with those words.
“The situation with the exchange rate has long been like that of a tree with an infected and rotting trunk for which there are only two options, either we cut the trunk so that it can grow healthier again, even though doing so will result in the temporary loss of the shade that protect us from the sun’s heat,” he indicated.
According to Chitchola, the Reserve Bank of Malawi has chosen to give the country shade today but that will not bear any fruit going forward.
“In fact, the Reserve Bank of Malawi should have done this a long time ago so that we should not have lost so much time and so many opportunities under the shade of a false exchange rate,” Chitchola highlighted.
He indicated three reasons why the Reserve Bank needed to make the correction which are; the kwacha was hurting local production of goods and services and if this was allowed to continue, the long-term result was going to be the death of local production and turning Malawi into a dumping ground for cheap foreign goods that add no value to the economy’s productivity, and that is a recipe for disaster.
Further, the minister said the kwacha was scaring away foreign direct investors and that it was promoting the growth of a criminal and illegal black market which was undermining banks, with people even buying foreign exchange from banks cheaply and later on selling that same forex at high premiums on the black market.
Meanwhile, Chitchola said government has intensified its efforts to diversify the Malawi economy by exploring some other growth potentia areas like Carbon credits trading and Climate Smart Funding, Mining Discounted projects, Cannabis Biomass Projects, Golden Visa Programme and Diaspora Revenue through establishing Diaspora Cities.
“Government wishes to remind the general public that dealing in foreign exchange without authorization or licence from the Reserve Bank of Malawi is illegal,” he explained.
Meanwhile, the number of CSPWP beneficiary households has been increased immediately from the current 362,450 to 520,000 households.
Copied: Gerard Chavez Kampanikiza
