The Economics Association of Malawi (Ecama) has asked the Reserve Bank of Malawi to review its monetary policy in view of the high cost of living in the country.
Ecama Executive Director, Edward Chilima, told a local radio station that time has come for RBM to deliberately lower interest rates.
“Time has come for the central bank to deliberately make a move to reduce the interest rates. Interest rates are too high and if we address such issues we will also be addressing the hardships that Malawians are facing,” he said.
Chilima said the current increase in prices of goods and services shows there are fundamental problems in our economy.
He said the country has very serious problems that must be addressed.
Chilima said if the interest rates stand at what they are at the moment, production becomes very high.
“When you are producing and the cost is very high, producers shift the cost to the consumer, because they are trying to recover from the high interest rates,” said Chilima.
He further said the other area that needs attention is addressing the foreign exchange rate.
Chilima said the exchange rate is fragile and most local companies are importing companies, hence they are importing at a very high cost.
“For the companies to survive, they need to pass on the cost to the consumer. This significantly contributes to the high cost of living in the country,” he said.
Apart from the high interest rate and the fragile of the exchange rate, Chilima said food shortage is another factor that is contributing to the cost of living.
He said the rule of supply and demand is currently playing on the market, hence the leadership needs to provide solutions.
“The blame on the increase in prices of commodities cannot go to the producer, because they are just responding to what the economy is offering. It’s tough time and we need to take to task those that are in authority so that they address these issues and create an environment where as a country we are able to produce more,” he said.
However, RBM Spokesperson, Mbane Ngwira, on Tuesday refused to comment on the matter, saying they only comment on facts and not opinions.
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