Reserve Bank of Malawi (RBM) governor Charles Chuka has warned Malawians against forcing government to spend beyond its means.
Chuka was speaking in Blantyre during the inauguration of CDH House which houses CDH Investment Bank.
Chuka’s warning comes at a time Members of Parliament are meeting in Lilongwe to draw up a provisional budget for the 2014/15 financial year.
The governor said forcing the administration to spend beyond its pockets has a potential to fuel high interest rates and increased inflation in the country.
“The country’s investment climate and indeed the country’s prospects for growth are enshrined in our ability to kill the person called inflation,” said Chuka.
“Inflation is destructive to businesses, is destructive to people’s lives. People struggle economically when inflation is rising and is too high. Focusing on fighting inflation is a key issue of our country,” said Chuka.
He said Malawi’s inflation comes from two things which are lack of food and too much government borrowing and printing of money.
“Sometimes we play ourselves the devil by pushing government to spend beyond their means. I think we should learn that when we push government to spend beyond its means, we are only creating problems for ourselves and the country,” said Chuka.
He said Malawians, both businesses and individuals, need to be realistic when making their demands to government.
Malawi is one of the countries on the continent with an extremely high inflation. The country’s inflation was recorded at 22.6 percent in May.
The Economist Intelligence Unit (EIU) expects average inflation to fall to 19.6 percent in 2014 compared to 28.6 percent in 2013, as a result of falling global food prices and aid funded subsidies for poor households.
They expect inflation to moderate to an average of 8.6 percent in the period 2014 to 2017 as productivity increases and as rising local fuel prices are offset by easing food prices.
