Written by RAPHAEL TENTHANI
BLANTYRE--IMF managing Director Christine Lagarde is in Malawi to assess 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 maravipost.com Friday.
Legarde's visit comes amid biting economic times following the unprecedented last May's 49 per cent devaluation of 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 floatation of the currency as recommended by the IMF, among others, have put a huge strain on many ordinary Malawians as prices of goods and services have shot through the roof.
The Consumers Association of Malawi (CAMA) is currently organising street demonstrations scheduled for January 17 to protest the same.
"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 their much-needed aid packages to Malawi.
At least 40 per cent of Malawi 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 wasn't enough to stabilise an economy fast going off a cliff. President Banda herself says Malawi needs up to a billion dollars for the currency to stabilise and begin to pick up.
Observers say the visit of the IMF chief should embolden the Banda administration that its tough economic reforms are being embraced by the West.
Lagarde was scheduled to hold a closed-door meeting with President Banda and her economic team yesterday. Today she is scheduled to meet the Budget and Finance Committee of Parliament and address the business community, the financial sector, the academia and civil society organisations at an event organised by the Malawi Confederation of Chambers of Commerce and Industry.
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 Lagarde was in Mauritius. She leaves Malawi on Sunday for Cote d'Voire and Mauritania.
(c) The Maravi Post 2013