Reserve Bank of Malawi (RBM) has said it will continue focusing on price and financial stability between 2019 to 2021 to attain an inflation target of five percent.
RBM Governor Dalitso Kabambe in an interview on Wednesday said the bank will make adjustments necessary to ensure achievement of this objective is achieved.
He said it is expected that by that time, the policy rate—a key driver of interest rates on loans—will also have followed reductions in inflation and settled at around 11 percent, while effective rates by commercial banks will have followed suit.
“As part of financial stability we want to continue supervising all commercial banks. We do not want non performing loans going beyond above 5 percent and that the kwacha remains stable,” he said.
In the new plan, Kabambe also pointed that the bank is expected to grow export revenues through the activities of the Export Development Fund (EDF) from less than $100 million (about K73 billion) per year currently to $600 million (K438 billion) per annum by 2021.
Further to this, the bank says it is also working with other agencies such as the Ministry of Foreign Affairs and International cooporation and Malawi embassies, to increase diaspora remittances from $186 million (about K136 billion) registered in 2018 to $500 million (about K366 billion) per annum by 2021.
In the face of illegal foreign exchange externalisation which, according to Financial Intelligence Authority, has cost Malawi K5.4 billion between January and November 2017, Kabambe said the bank has put in place policies to counter this.
In the financial sector, the governor said the main objective of the bank for the next three years will be to continue maintaining a safe, sound, stable and resilient financial sector by ensuring that the country has the necessary pieces of regulation and legislation throughout the period.
Giving a brief of 2018, he said the bank over-performed on all its strategic priorities with average inflation at 9.2 percent against a target of 9.5 percent.
Kabambe added that the bank managed to sustain a stable exchange rate, developed and promoted financial institutions, market and instruments and ensured a sound robust and resilient financial sector among others.
Minister of Finance, Economic Planning and Development Goodall Gondwe is on record saying government is committed to continue implementing sound macroeconomic policies aimed at spurring growth and creating jobs by focusing on productive sectors as outlined in the Malawi Growth and Development Strategy (MGDS) III with strong multiplier effects. n