Malawi’s proposal to introduce a new MK5,000 banknote was supported by The International Monetary Fund recently. They agreed to the fact that higher denomination notes will ease cash transactions.
The Bank also stated that the process could lead to added printing costs, affecting the Central Bank’s overall profit. The introduction of new MK5,000 notes may also lead to inflation, but there is no supporting evidence for this assumption. Officials are also worried that larger denomination notes may make it hard to fight illegal trade, money laundering, and corruption.
However, the IMF predicts that the new notes will stabilise the economy and increase this year’s growth by 4 to 5 percent. They suggested that a limit should be set on the highest denomination based on a cost-benefit analysis and experiences of other countries.
Minister of Finance Goodall Gondwe said that the new notes will save Malawi’s foreign currency reserves as it costs $8 million to order new banknotes. He had also stated that the new notes will make transactions easier and serve as a cost-cutting measure. However, Ministry of Finance Spokesperson, Kutengule later stated that Gondwe’s opinions were personal and the Treasury has no such plans since the economy was on a right track.
After Finance Minister Gondwe made the announcement, some economists feared that the currently highest denomination of the country - MK2,000 note has lost value and Malawi’s economy was not in a great shape.