The International Monetary Fund warns of a possible devaluation of the kwacha, against the main commercial currencies, namely the US dollar, the pound sterling, the euro and the rand Despite the fact that the government of Lilongwe devalued the local currency by 25% in May this year, an exercise that saw the kwacha fall from around 840 to 1,031 per dollar, the IMF reiterates that a misalignment in the exchange rate still persists Until this Wednesday, the Kwacha was trading at 1,450 against the US dollar. This exchange rate misalignment led to a sharp decline in imports, with greater focus on fuel, fertilizers, medicines and food. Managing Director of the IMF, Bo Li, explained that this reality puts Malawi in a challenging economic and humanitarian situation. ai Gwenhamo made it known that there is a government commitment to ensure that there is alignment in the external sector, which can encompass the exchange market. According to the IMF Board, it is important that the government of Lilongwe, continues with fiscal discipline, supported by a realistic budget, an improved public financial management system and comprehensive fiscal reporting. The board added that price and financial sector stability could help build a foundation for growth, led by the private sector. rebuilding external buffers will be extremely important to reduce Malawi’s vulnerabilities to external shocks. For the IMF, the Central Bank of Malawi’s commitment to rebuilding its foreign exchange reserves requires the implementation of a strategy to end unsustainable policies, including excessive use of swaps and commercial credit to maintain strategic imports and other quasi-fiscal operations. (RM)Source:Radio Moçambique Online

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