Minister of Finance Sosten Gwengwe says Malawi’s deal with the International Monetary Fund (IMF) under the Rapid Credit Facility (RCF) has no clause prescribing devaluation as a precondition.

The minister made the clarification in Parliament in Lilongwe in response to a question from Chiradzulu West legislator Mathews Ngwale, who asked him to address reports that there is a looming 25 percent devaluation of the kwacha as part of the conditions for the deal.

Minister of Finance Sosten Gwengwe

The legislator feared that Malawians will be heavily affected if government effects another devaluation having already devalued the kwacha by 25 percent on May 27 2022.

“If you look at how people are suffering, especially in the villages, with the first devaluation, to give them a second one would be very saddening,” said Ngwale.

He urged the minister to address the issue, saying people needed to know the truth.

But in his response, Gwengwe said any condition to an IMF deal is fulfilled before the IMF executive board approves a programme. He, therefore, said any reports of a pending devaluation are not true.

He said: “If there was any condition to do with devaluation, it was going to be done before the IMF board approved the programme with Malawi.

“Whatever was expected of us was done prior to the approval and once the board approves, it is a done deal.”

First Deputy Speaker Madalitso Kazombo called on the legislators and the public not to panic about devaluation.

On concerns of misalignment of the kwacha to the dollar as raised by the IMF, Gwengwe said devaluation is done by the Reserve Bank of Malawi, as such, the central bank is best placed to speak on that matter.

“I will not comment much about devaluation. I do not want to be seen to be influencing functions of the Reserve Bank,” he said.

The minister stressed that the IMF programme he signed for has no requirement for devaluation. In May this year, RBM devalued the kwacha by 25 percent to reflect its true value, which led to a rise in the cost of living.

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