Essay on The Crisis Of Malawi 's Currency Troubles

773 Words 4 Pages
There were several things that created Malawi’s currency troubles. After having great economic success in his first term as President, Mutharika took full control of economic policy in his second term. He punished those who questioned his actions, and harassed or jailed anyone who questioned or opposed him. This alienated countries who had been providing aid to Malawi such as Britain and the U.S. During this time, one of the country’s main exports, tobacco, decreased in demand due to the poor quality of the product. To add to Malawi’s troubles, Mutharika did not want to devalue the kwacha as recommended by the IMG, because he said that it would cause the prices of commodities and services to go up, which would hurt the poor people in Malawi as well as invite economic depression. When the IMF delegation tried to step in to help, Mutharika refused to meet with them, calling them “too junior.” (Hill, 2014) Malawi had a financial crisis on its hands with a president not willing to find a solution. When Mutharika first took office, he was able to turn the economy around thanks to tobacco production and fertilizer subsidies, turning a food deficit into a surplus. (Hill) Although Mutharika’s actions created swift success, his plan was full of corruption, was unsustainable, and did not follow the principles of free markets, creating a number of issues.
First off, due to Mutharika’s behavior, Malawi’s foreign aid was suspended when Mutharika expelled the British…

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