Malawi’s President, Lazarus Chakwera, has taken decisive steps by immediately suspending all international travel involving himself and government officials. Additionally, he has issued a directive for all ministers currently abroad to return home.
In a televised address on Wednesday evening, President Chakwera unveiled a series of measures, including restrictions on domestic travel and a 50% reduction in fuel allocations to cabinet ministers and senior government figures. These austerity measures are slated to remain in effect until the end of the fiscal year in March.
Similar cost-cutting actions were introduced during the Covid-19 pandemic but lacked stringent enforcement, resulting in limited impact.
President Chakwera instructed the finance minister to allocate a reasonable wage increase for all civil servants in the upcoming budget review. Moreover, he mandated a reduction in income tax in the new budget to alleviate the financial strain on workers affected by inflation-driven pay devaluation.
These initiatives coincide with the recent approval by the International Monetary Fund (IMF) of a four-year credit facility for Malawi, amounting to $174 million (£140 million). This approval closely followed Malawi’s decision to devalue its local currency, with the central bank reporting a 44% decline in the value of the kwacha last week.
Analysts speculate that the currency devaluation might have been a prerequisite for securing the IMF credit facility.