By Our reporter
Some financial pundits have unveiled key solutions to what they described as forex crisis that has resulted into high cost of living in the country.
In his recent statement, financial analyst Dr. Paul Gadama said highlighted the pressing issue of foreign exchange shortages and need for bold policy decisions.
According to him, forex prices are determined by supply and demand forces but regulatory frameworks and exchange rate regimes can hinder the rate’s response to the market dynamic.
“Central Bank play a crucial role but resolving forex shortages requires addressing the supply side and correcting misalignments through market-driven solutions. The regulated forex market and exchange rate regime can limit the rate’s response to supply and demand mismatches,” he explained.
He disclosed that forex shortages recovery needs bold decision making from central bank.
“The government should also work towards prudent and sustainable debt management, where the funds borrowed are applied to sound economic projects that generate income for repayment and the country’s overall development, avoiding borrowing for recurrent expenses”, he stated.
A Mzuzu based financial analyst who is also a Youths Action Campaign (YAC) executive director, Jackson Caesar-Msiska while conquering with Gadama explained that problems with the country’s forex market are weak economic fundamentals, low foreign reserves, increased external debts and a double forex window.
Msiska said that this country needs to build up its foreign reserves to stabilize its currency. The government should focus on increasing agricultural exports and attracting foreign investment.
“Adopting disciplined fiscal measures like prudent spending, appropriate fiscal controls, and transparency in budgeting to improve the economy.
“The government should adopt and implement a forex policy that addresses the issues of the parallel market in Malawi, which will help to eliminate the distortions in the forex market,” said Msiska.
