A call has been made to the country’s central back to ensure the monetary and exchange rate policy is structured and modernized to respond to the changes and shocks which have taken place on the economic front.
Opening the 2022 Monetary policy conference in Lilongwe, Labour Minister Vera Kamtukule says at the centre of the MW2063 is growing the economy which cannot be achieved unless plans by the Reserve bank of Malawi are coordinated with other relevant stakeholders.
The call comes against a backdrop of Cyclones Ana and Gombe, the COVID-19 pandemic and other internal shocks such as the cholera outbreak which have stalled the country’s progress.
Kamtukule noted all these factors need to be incorporated in the Monetary policy in line with the uncertainties which have taken place.
“When we’re talking about monetary policy, they will mean nothing if the average Malawian doesn’t consider them being relevant. So for me I want to see discussions around what kind of policies the central bank is championing that would translate adequately to basic Malawians having the basic necessities that they need to advance their lives; being able to have food from 1 to 30 every month.
“One of the critical take-outs that I would want to see from this conference is about how are we structuring our monetary policy, how are we modernizing it because things have changed; the world of work has changed, the economies are changing; economies do change but then how is our monetary policy responding to that?
“Because in a stabilized economy, you want to have even the private sector that is dealing with certainty because that is the only way we can sustain our growth but also sustain people’s livelihoods” she enthused
The Minister also stressed on the need to ensure that small to medium industries are promoted through value addition thereby helping in the job creation agenda.
RBM Governor Dr. Wilson Banda acknowledged Money policy affects a number of factors such as interests’ rates noting people don’t understand the rationale behind devaluation and other decisions by the regulator.
He was upbeat the interface will enable the central back interact with the academia, business community and other sectors of the economy to discuss the issue openly in achieving a common understanding on matters arising.
The Governor stated that building a resilient economy will need a combination of supportive policy measures both from the fiscal and monetary sides to what government is doing.
He admitted the impact of the COVID-19 pandemic, war in Ukraine and Cyclones which compelled authorities to apply unconventional monetary policy measures in order to support economic recovery, throwing in the policy space unpleasant trade-offs with inflation fight.
“We are trying to see how best the current monetary policy framework can support government to recover from that underperformance of the economy. So what type of models are we talking about? We are looking at enhancing the current economic models. The law says Reserve bank shall focus on internal and external price stability. But as you will hear today, we need to go beyond that mandate of internal and external price stability.
“We should not only be focusing on price stability, we should also be considering issues of growth. Our mandate should not just be limited to just managing inflation, domestic as well as the exchange rate, but we should also be supportive of other initiatives to grow the economy”
In its quest to support economic recovery. RBM implemented accommodative monetary policy stance which included interest rate cuts, reduction of Liquidity Reserve Requirement and introduction of moratorium among other measures.