Malawi’s President Lazarus Chakwera has implemented an immediate suspension on all international travel for himself and his government as a cost-saving measure.
The decision comes in the wake of a significant currency devaluation, prompted by Malawi securing a loan from the International Monetary Fund (IMF) to bolster its struggling economy.
Mr. Chakwera has further directed all ministers currently overseas to immediately come back to their home country.
Senior government officials’ fuel allowances have been reduced by half.
Malawi’s economy has been facing turbulent times marked by severe shortages of petrol and diesel, alongside soaring inflation rates.
During a televised speech, Mr. Chakwera announced that these measures would be upheld until the conclusion of the financial year in March 2024.
Austerity measures akin to those announced during the Covid-19 pandemic had minimal impact as they weren’t rigorously enforced.
As a step toward alleviating the cost-of-living challenges, the president has tasked the finance minister with including provisions for a substantial wage hike for all civil servants in the upcoming budget review.
He has additionally mandated a reduction in individual income tax in the forthcoming budget to assist workers grappling with the devaluation of their incomes.
Days after Malawi’s central bank announced a 44% devaluation of the kwacha, the IMF has greenlit a four-year credit facility worth $174 million (£140 million).
Analysts speculate that the devaluation could have been a prerequisite for obtaining the IMF credit facility.
There are concerns that the currency devaluation might lead to increased prices and potentially exacerbate the financial challenges faced by Malawians, similar to what occurred a decade ago.
Authorities have attributed the economic decline to external factors, citing events like a destructive cyclone earlier this year and the conflict in Ukraine.
