People’s Transformation Party (Petra) president Kamuzu Chibambo has bashed the Reserve Bank of Malawi (RBM) for allegedly failing to come up with measures to stabilise the country’s economy.

Addressing a press conference in Blantyre on Monday, he said the central bank is sticking to a discretionary monetary policy that has not helped the country to revamp its economy.

Chibambo (C) with his adviser Evans Namanja (L) and Petra national director of research Maurice Gondwe

Chibambo noted that the discretionary monetary policy, which the country has been using for the past 50 years, has failed Malawians and there is need to switch to currency board arrangement economic model.

In macroeconomics, discretionary policy is an economic policy based on the adhoc judgement of policymakers as opposed to policy set by predetermined rules.

On the other hand, a currency board is a simple exchange rate and monetary system established to supply an economy with domestic currency.

Said Chibambo: “Petra is calling for a major shake-up at RBM and the Treasury. We need to engage experts that can swiftly reign in the free fall of the kwacha and bring about a stable economic environment.”

The Petra president, who withdrew his party from the nine-member Tonse Alliance which was ushered into power through the June 23 2020 court-sanctioned Fresh Presidential Election, further observed that the International Monetary Fund (IMF) is not a solution to the country’s economic challenges, saying it is in a business and that Malawi should find other alternatives to revamp the economy.

He said devaluation of the kwacha which the country has implemented for the past decades have not benefited Malawians, but IMF and other foreign business interests.

Said Chibambo: “The IMF is a business, they like to go where the economy is suffering. We have the resources in this country, we have gold, uranium, rubies and rutile, which we can start processing and exporting and can help to revamp our economy.

“Other nations have done it, why can’t we? It’s high time we woke up and began to do things the way they are supposed to be done.”

But in an interview on Monday, RBM Governor Wilson Banda said he will not comment on statements made by politicians.

He said: “It will be wrong for a person in my position to comment on issues to do with politicians. I don’t comment on statements issued by politicians. It is unethical. It doesn’t matter it’s from which party. I am a public servant.”

Minister of Finance and Economic Affairs Sosten Gwengwe declined to comment on the matter.

Chibambo’s calls come about two months after IMF challenged RBM to adjust the policy rate in view of intensifying inflationary pressures to achieve price stability.

In its Regional Economic Outlook for Sub-Saharan Africa published on April 14 2023, IMF said the monetary policy should be steered cautiously until inflation, currently at 26.7 percent, is firmly on a downward trajectory and projected to return to the central bank’s target range.

Reads the IMF report: “In countries like Malawi, growth in reserve money continues to exceed nominal gross domestic product [GDP] growth, a situation which elevates inflationary pressures.

“Policymakers, thus, need to adjust the pace of monetary policy tightening to both the level and trajectory of inflation, in close coordination with fiscal policy, which can also tame domestic demand pressures where they exist and contain money growth.”

In January this year, Chibambo hit hard at the Lazarus Chakwera-led government for failing to curb corruption and adhering to the austerity measures that the government announced last year.

The post Petra’s Kamuzu Chibambo hits at RBM first appeared on The Nation Online.