RBM deputy chief speaks on taming inflationary pressure

Reserve Bank of Malawi (RBM) deputy Governor Kisu Simwaka has said Malawi will not reduce inflation to single digits unless the government and other institutions tackle deep-rooted structural weaknesses. Writing on his Facebook page on Monday, Simwaka said monetary policy alone cannot overcome challenges such as foreign exchange shortages, climate related food production shocks, high domestic borrowing and weak policy coordination. He said while the RBM remains committed to achieving price stability, success will depend on coordinated action across government. "The Reserve Bank will play its part within its mandate. But it cannot be done by the Reserve Bank alone. It requires the government, and it requires all relevant institutions to move in the same direction," Simwaka said. He noted that neighbouring countries, including Tanzania, Rwanda, Mozambique, Zambia and Zimbabwe, have already returned to single-digit inflation by rebuilding the economic foundations that support effective monetary policy. Simwaka also attributed persistent inflation to agriculture's dependence on rainfall, saying food accounts for about 55 percent of the Consumer Price Index basket. "Monetary policy cannot manage weather. This is an agricultural vulnerability. We need climate-resilient agriculture because every dry spell becomes an inflation problem," he said. Economics Association of Malawi (Ecama) President Bertha Chikadza said authorities should also focus on reducing unnecessary imports to ease pressure on foreign exchange reserves. "The government should also cut unnecessary imports to reduce pressure on foreign reserves," Chikadza said. Another economic commentator Mrvin Banda said Simwaka had correctly identified the immediate drivers of inflation but argued that the country's deeper challenge is weak production. He added that Malawi would only achieve lasting price stability by expanding irrigation, promoting manufacturing and agro-processing, diversifying exports, investing in reliable electricity and transport infrastructure, restoring fiscal discipline and building stronger foreign exchange reserves

WIRE — Reserve Bank of Malawi (RBM) deputy Governor Kisu Simwaka has said Malawi will not reduce inflation to single digits unless the government and other institutions tackle deep-rooted structural weaknesses. Writing on his Facebook page on Monday, Simwaka said monetary policy alone cannot overcome challenges such as foreign exchange shortages, climate related food production shocks, high domestic borrowing and weak policy coordination. He said while the RBM remains committed to achieving price stability, success will depend on coordinated action across government. "The Reserve Bank will play its part within its mandate. But it cannot be done by the Reserve Bank alone. It requires the government, and it requires all relevant institutions to move in the same direction," Simwaka said. He noted that neighbouring countries, including Tanzania, Rwanda, Mozambique, Zambia and Zimbabwe, have already returned to single-digit inflation by rebuilding the economic foundations that support effective monetary policy. Simwaka also attributed persistent inflation to agriculture's dependence on rainfall, saying food accounts for about 55 percent of the Consumer Price Index basket. "Monetary policy cannot manage weather. This is an agricultural vulnerability. We need climate-resilient agriculture because every dry spell becomes an inflation problem," he said. Economics Association of Malawi (Ecama) President Bertha Chikadza said authorities should also focus on reducing unnecessary imports to ease pressure on foreign exchange reserves. "The government should also cut unnecessary imports to reduce pressure on foreign reserves," Chikadza said. Another economic commentator Mrvin Banda said Simwaka had correctly identified the immediate drivers of inflation but argued that the country's deeper challenge is weak production. He added that Malawi would only achieve lasting price stability by expanding irrigation, promoting manufacturing and agro-processing, diversifying exports, investing in reliable electricity and transport infrastructure, restoring fiscal discipline and building stronger foreign exchange reserves

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