President Peter Mutharika has unleashed the Reserve Bank to crack down on what he says is continued forex externalisation which is draining the country’s foreign currency reserves.
Mutharika made the remarks Wednesday when he officially opened the Mzuzu Branch of the Reserve Bank of Malawi which has been constructed at the cost of K18.4 billion.
The cost is slightly over three-and- a-half times that of the original cost of K5.2 billion budgeted at the start of the project around 2000 as the bulk of the construction materials were procured after the devaluation of the kwacha as well as depreciation of the currency during the period of construction.
He said externalisation of forex is aggravating people’s poverty hence the need to reverse the trend.
“This country is losing a lot of money in forex externalisation. We are losing more money than the aid we need from anywhere. We must hurry to arrest and slay this monster of forex externalisation once and for all,” said Mutharika.
He called on the Reserve Bank to speed up the formulation of a team which will, among others, comprise Treasury, Malawi Revenue Authority and other players dealing with forex is the country is to save its hard-earned forex.
Mutharika said the country needs laws that bite and a regulatory framework that firmly secures the country’s financial borders.
“We need to secure what we already have. But we cannot progress with an Exchange Control Act that is older than our democracy,” said Mutharika.
He blamed the country’s laws which he said were made when people’s thinking was limited saying “This is one of our problems. We have been thinking poor and small for a long time.”
On the newly opened Mzuzu Branch of the Reserve Bank of Malawi, Mutharika said, the nature of the facility symbolises the direction the country is heading as regards development.
The construction of the branch, Mutharika said, shows Mzuzu has grown as a centre of economic activity in the Northern Region.
“You all know that no one can build a bank where nothing economic is happening. It is because there is growing economic activity in this region that we can now have this Reserve Bank here,” said Mutharika adding Mzuzu City deserves economic infrastructure just like Lilongwe and Blantyre.
He disclosed plans to construct a new airport in the city to replace the old airport.
Mutharika however said government will start by renovating and modernising old Mzuzu Airport.
Reserve Bank Governor, Charles Chuka, said for 50 years, the bank’s activities were centralised in the Southern and Central regions.
“As a result of increased demand for currency, the Central Bank had no choice but to establish some chests in Mzuzu but the establishment of this bank will contribute significantly to the growth of the economy in Mzuzu,” said Chuka.
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