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There is no crisis—RBM

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Reserve Bank of Malawi (RBM) Governor, Charles Chuka, has downplayed the impact of Malawi getting off-track on the International Monetary Fund (IMF) programme, saying all is well in Malawi and that there is no crisis.

“We will not run out of fuel because the IMF programme targets were missed,” said Chuka, writing on his Facebook page on Friday.

“At the same time, meeting the IMF targets in coming months will not mean cutting on social expenditures,” he said.

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He said maintenance of a flexible exchange rate has helped to build resilience in the

economy.

The Central Bank Chief took a swipe at the media for what he calls “sensationalization” of the issue, saying it is “disheartening how Malawians trash their own country for the world to see”.

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“It is sad that the stories are deliberately biased and self-serving. Because they are based on half truths. The stories are not in our national interest but to create undue panic,” said Chuka.

He explained that Malawi missed the domestic borrowing limit largely because of major shocks it has suffered which have put pressure on budget.

“In such circumstances, cutting the budget is no child’s play,” said Chuka.

He said it is in recognition of the realities on the ground that the IMF has given Malawi more time to achieve the programme targets. “Thus, all is not lost. Not yet,” said Chuka.

He said it is also short-sightedness and indeed self-serving to sensationalize the impact of missing the IMF target, saying loans obtained from IMF do not directly fund budget.

“They are balance of payments support to RBM,” said Chuka.

He said it is the donor budget support triggered by a successful implementation of an IMF-supported economic programme, that increases financing of the budget.

He said, however, apart from the African Development Bank (AfDB), not much budget support came when Malawi met IMF targets in April this year.

“The country has survived since October 2013 without much budget support. Moreover, the country has sustained reasonable level of reserves throughout the period. Forex is still available in the market despite the very short periods of temporary shortages, some of that deliberately engineered by importers,” said Chuka.

He also said the impact of reduced tobacco inflows into the country has been exaggerated, saying tobacco auction proceeds provide forex of less than two months of import cover.

He said donor and forex inflows to non-governmental organisations provide another two months of imports.

“Thus the bulk of our forex needs comes from other non-tobacco exports,” said Chuka.

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