- Malawi's currency, the Kwacha, has been falling rapidly against major currencies, causing deteriorated terms of trade. Price hikes on imported goods are expected, with fuel prices causing special attention. Malawian consumers should brace for more tough times ahead as the recent Kwacha depreciation is likely to push fuel prices up, an economic expert warns.
Malawi Economic Justice Network (MEJN) acting national director, Mabvuto Bamusi in an interview Wednesday said the depreciation of the Kwacha against major currencies is a catalyst to an increase in fuel prices.
"Fuel is charged in dollars and if our currency is losing value to it then it means we have to cough a lot more of the local currency to meet the cost. This scenario will in turn have an impact on fuel prices," said Mr Bamusi.
Mr Bamusi said even in the absence of the currency failure, there is a possibility that fuel prices might go up because the national Petroleum Pricing Committee (PPC) has always argued that fuel prices in the country are too low to march with importation costs.
"Fuel prices can go up any time regardless of the Kwacha failure because PPC has argued that the current prices are too low to march with importation costs. This depreciation will just provide a loophole for that," he said.
Petroleum Importers Limited General Manager, Robert Mdeza concurred with Mr Bamusi's sentiments saying it would be very difficult for the Malawian company to operate under the current fuel prices because importation costs have gone up due to the Kwacha depreciation.
He said Malawi's Petroleum Pricing Committee had met last week to review fuel prices in the wake of the Kwacha depreciation and the proposal was submitted to government for its approval.
"It is obvious that fuel prices might go up," said Mr Mdeza. "We can not maintain the same prices when the Kwacha has slumped to K131 against a US Dollar. This will be a very unhealthy environment for business," he added.
Efforts to talk to PPC Chairman, Chancellor Kaferapanjira proved futile as he was reportedly abroad. Malawi's Finance Minister Goodall Gondwe, too, could not be reached for comment when 'The Chronicle' wanted to find out government's position on the PPC's proposal.
Fuel prices in Malawi already went up by an average 4.54 percent in November last year, a development the Consumer Association of Malawi (CAMA) described as regrettable as it would push the cost of living in the short and medium term.
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