Malawi’s President Pledges to Keep Floating Currency
Dec 31 (Bloomberg)-- Malawi’s President Joyce Banda said she won’t reverse the currency’s devaluation as consumer groups plan nationwide protests next month against soaring costs.
“I will not stop the flotation of the kwacha,” Banda said on the Lilongwe-based Zodiak Broadcasting Station today. “That will be suicidal. We just have to be patient.”
Malawi devalued the kwacha by a third against the dollar on May 7, a month after Banda took office, and agreed to let the exchange rate float to meet conditions set by the International Monetary Fund. Since then, the currency has dropped 26 percent to 326 per dollar, making it the worst-performing unit in Africa. Inflation in the southern African nation surged to 33 percent in November from 30.6 percent in the previous month.
“I am the first one to agree devaluation has brought suffering,” Banda said. “However, this has also helped exporters earn more and for the first time in as many years, tobacco growers benefited a great deal from their crop as a result of devaluation. Our only problem is that we have a very narrow export base and this is why we have been hit hard by this devaluation.”
The Consumers Association of Malawi has organized mass demonstrations to take place on Jan. 17 to protest against soaring prices. The group is also calling on Banda to reduce her budget on travel and vehicles and cut back on government spending.
Banda said food shortages this year have added to consumers’ woes. About 2 million Malawians are without food, forcing the government to increase aid to vulnerable families, she said.
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