Economists are divided in opinion on whether the country should consider adopting a Currency Board Arrangement (CBA) as an instrument for managing the monetary space.
A currency board is a monetary authority that issues a local currency fully backed by a foreign reserve currency, and which is freely convertible with the foreign reserve currency at a fixed exchange rate.
This came out on Wednesday during a panel discussion at the start of the Economics Association of Malawi (Ecama) annual conference in Mangochi District.
Panelists were responding to a presentation by University of Malawi associate Economics Professor Winford Masanjala titled ‘Framework for Internal and External Stabilisation.’
Malawi Confederation of Chambers of Commerce and Industry immediate past President Lekani Katandula said a CBA in itself is not the answer to Malawi’s monetary woes.
“We have way more issues than just what would be resolved by going to a currency board arrangement as an example,” Katandula said.
In his address, University of Malawi economics Professor emeritus Chinyamata Chipeta, a staunch proponent of CBA, said the reason currency board’s work is because it’s not discretionary.
“The reason we are struggling with the budget is because we don’t have an agency of restraint,” Chipeta said.
RBM Director of Economic Policy and Research Kisu Simwaka, who was one of the panelists, recommended an overall review of the economy to develop remedies.
“We are consuming significantly higher than what we produce. That is the fundamental problem,” Simwaka said.
