International Monetary Fund (IMF) Managing Director Christine Lagarde arrived in Malawi Thursday to assess the progress of the country’s economic reforms.
“The Managing Director is in Malawi to see first hand the challenges facing the country. She will also hear from different stakeholders and reaffirm the IMF’s support to Malawi,” an
IMF spokesman travelling with the former French Finance Minister told PANA Friday.
Ms. Legarde’s visit comes at a time of biting economic hardship in Malawi, following last May’s unprecedented 49 per cent devaluation of the national currency, the kwacha.
With inflation now hovering at around 33 per cent and interest rates at an average of 36 per cent, the historic devaluation and the resultant flotation of the currency as recommended by the IMF, among others, have put a huge strain on ordinary Malawians, as prices of goods and services have shot through the roof.
The Consumers Association of Malawi (CAMA) has scheduled street demonstrations for 17 Jan. to protest the hardships.
“Devaluation is a necessary economic reform initiative but you cannot devalue the currency and let it float without necessary safe-guard measures,” said CAMA Executive Director John Kapito.
Former President Bingu wa Mutharika resisted the advice to devalue the kwacha, saying it would lead to a run on commodity prices which would ultimately hurt the poor.
Western donor nations and agencies – including the IMF – reacted by withholding much-needed aid packages to Malawi. At least 40 per cent of Malawi’s national budget comes from donors.
Soon after assuming power following the sudden death of Mutharika last April, President Joyce Banda embraced the advice to devalue the kwacha and let it float freely against major currencies.
Donors rushed in to inject US$800 million into the economy, but this was not enough to stabilise it.
President Banda herself says Malawi needs up to a billion dollars for the currency to stabilise and begin to pick up.
Lagarde was scheduled to hold a closed -door meeting with President Banda and her economic team Thursday, and then meet the Budget and Finance Committee of Parliament Friday, in addition to addressing the business community, the financial sector, the academia and civil society organisations.
She will later address a press conference alongside Finance Minister Ken Lipenga and Governor of the Reserve Bank of Malawi Charles Chuka.
Before visiting Malawi, the IMF boss was in Mauritius.
She leaves Malawi Sunday for Cote d’Ivoire and Mauritania.