Malawi deploying army, intelligence operatives to enforce currency trading rule after 44% devaluation

By Thulani Mpofu November 15, 2023

Malawi has outlined measures including deploying the army and intelligence operatives to enforce compliance with regulations meant to cushion its currency after the government devalued it by 44%.

Fearing steep price increases and worse poverty, Malawians responded angrily to the November 9 devaluation of the kwacha and are planning protests. The government increased fuel and electricity prices a day later.

The speaker of parliament, Catherine Hara, stopped a debate on the devaluation on November 13, Nyasa Times reported on the day. Hours earlier, Finance Minister Simplex Banda had refused to take questions after a press briefing at which he read out the government measures to respond to the possible ill-effects of the revaluation of the unit.

Banda, Reuters reported on November 13, defended the devaluation saying will correct an overinflated currency that had previously hindered investment and bolstered illegal foreign exchange markets.

With immediate effect, he said, the fiscal police, with support from the financial intelligence authority, national intelligence service and the Malawi Defence Force “will intensify the crackdown on all illegal foreign exchange trade in all markets across the country and in border areas,” per the Nyasa Times.

The central bank will restrict authorised dealers to sell foreign exchange in cash over a counter in any foreign currency equivalent of $2,000 per traveler.  If the traveler wants more, the exceeding amount should be placed in an electronic bank card.

Banda has threatened bank workers with arrest if they are caught funneling foreign currency to the parallel market.

Furthermore, the government will enhance social grants and food aid to 500,000 needy households, improve civil servants’ salaries, recruit 2,700 more health workers and export 5,000 skilled professionals.

The donor-dependent southcentral African nation, Banda said, hopes to generate more foreign currency through carbon credits trading, diaspora remittances as well as greater exports of minerals and cannabis.

In parliament, Hara stopped the debate on the revaluation of the currency arguing that the opposition had not followed standing orders.

Meanwhile, the International Monetary Fund’s executive board is expected to meet today (November 15) to discuss a 48-month extended credit facility for Malawi that may unlock $174mn over four years for the African nation.

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