In an attempt to save money, President Lazarus Chakwera of Malawi has immediately halted foreign travel for himself and cabinet members. The action comes after Malawi’s currency (faced) significant depreciation in exchange for an IMF loan intended to strengthen the country’s faltering economy.
All ministers who are currently abroad have been told to return home by Mr. Chakwera.
Senior government officials’ fuel allowances have been slashed by fifty percent. There has been a severe gasoline and fuel shortage as well as significant inflation throughout Malawi’s economic upheaval.
Mr. Chakwera made this declaration in a televised speech that the measures would stand until March 2024, when the fiscal year comes to an end.
When the Covid-19 outbreak hit, some comparable austerity measures were declared, but their effectiveness was limited because they were not severely implemented.
In an effort to alleviate the cost-of-living issue, the president has directed the finance minister to include a fair pay raise for all civil servants in the upcoming budget review.
In the next budget, he has also directed a reduction in individual income tax to assist workers whose wages have decreased in value.
Within days of Malawi’s central bank announcing the 44% depreciation of the kwacha, the IMF approved a $174 million (£140 million) four-year lending facility.
Analysts speculate that obtaining the IMF credit facility might have required the devaluation.
Some worry that, like what happened ten years ago, the devaluation of the currency will just drive up costs and possibly exacerbate Malawians’ financial problems.
Authorities have attributed the economic slump to outside causes, including the conflict in Ukraine and a catastrophic storm that struck earlier this year. Ref: AFP
