2 May 2014

Malawi: Economic Policy Reforms Yield Positive Results - Govt

Blantyre — The Ministry of Finance says Economic Policy Reforms which President Dr Joyce Banda's administration instituted in 2012 in order to resuscitate the country's economy are yielding positive results. Among other reforms which Government instituted to bring quick gains to the economy include introduction of the Economy Recovery Plan, Devaluation of the Kwacha by 49 percent and tightening Expenditure Measures.

This, according to MoF Public Relations Officer, Nations Msowoya has turned around the stagnated economy as evidenced by inflation rate drop to 22 percent, kwacha getting stabilized and having forex inflows.

"The devaluation of the kwacha by 49 percent was aimed at ensuring that the value of the kwacha was real as before this, the value of the kwacha was artificially made to be strong when in essence it was not and because of this people started hiding their foreign exchange in homes instead of putting it in banks which led to shortage of fuel and forex.

"Remember airlines like Ethiopia Airways and Kenya Airways were not accepting ticket purchases in kwacha in 2011 due to foreign exchange shortages and all these changed after the devaluation though it brought some negative effects including increase in prices of commodities.

"Now, the inflation rate has gone down to 22 percent, fuel and foreign exchange is now available that makes companies to import their raw materials easily reflecting strong growth in the private sector," clarified Msowoya in an interview with the Malawi News Agency (Mana).

He added: "These economic policy reforms have not even spared the Electricity Supply Corporation of Malawi and Water Boards which are also registering profits."

On his part, Indigenous Business Association of Malawi (IBAM) President, Mike Mlombwa concurred with Msowoya that economic policy reforms that have also seen stabilization of the kwacha are registering positive results but described the change as short lived.

"Of course, fuel, forex is available almost everywhere and companies are making profits because of various economic policies that were instituted two years ago, however these are just temporal changes.

"First of all, you must understand is that these reforms are only benefiting foreign investors at the expense of local businesses as it is supposed to be. In addition, currently many banks are busy buying and keeping forex waiting to sell it at a higher price when the country's economy overturns again," said Mlombwa.

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