Written by MANENO CHIMULALA
MZUZU--As Malawi local currency (Kwacha) continues to depreciate, some quarters say government over-expenditure creates more demand for foreign currency.
The local currency, which just two weeks ago was trading at an average of K370 against the United States dollae, was by the start of business on Saturday selling at K395 at National Bank of Malawi while the Malawi Savings Bank was offering the green buck at K391.67.
Financial Market Dealers Association (Fimda) President Alfred Nhlema told local media that although the kwacha depreciation was expected, government expenditure was also worsening the situation.
“We have noted that there is little fiscal restraint on the part of the authorities,” said Nhlema, adding: “The continued increase in government expenditure is exerting pressure on demand of foreign currency, thereby defeating the whole purpose of a tightened monetary policy stance.”
He said the situation requires a balancing act between fiscal and monetary discipline for the country to achieve a stable economy.
Commenting on the issue, Consumers Association of Malawi (CAMA) Executive Director John Kapito said Pres. Joyce Banda’s frequent travels was one of the reasons government was spending excessively, thereby exerting more pressure on the country’s currency.
(c) The Maravi Post 2013