"Running Head:CURRENCY TROUBLE IN MALAWI: CASE STUDYCurrency Trouble in Malawi: Case StudyNameCourseDate CURRENCY TROUBLE IN MALAWI: CASE STUDYIntroductionMalawi's third president the late Bingu Wa Mutharika experienced a fairly successful first term,and during this period, Malawi's economy grew at an average of 7%, and the average inflationremained below 12 percent, compared to close to 2 % growth as well as 35 % inflation over thepreceding decade. Also, exports as a percentage of GDP grew to allow the country to accumulatesubstantial foreign reserves that helped in minimizing the volatility of the country's currency. Atthe root of the currency problems of Malawi has been the systematic decline in foreign exchangereserves which was caused by increased domestic public borrowing or an ESF loan from the IMFwould have prevented further decrease in foreign reserve as well as stabilized the Kwacha(Agbor, 2012). Mutharika had a massive heart attack and died due to the fact that the hospitallacked medicine due to lack of currency by the government to perchance foreign medicine.What were the causes of Malawi's currency troubles?There were several factors that had a hand to the currency problems in Malawi. The first is thatPresident Bingu Wa Mutharika took full control of economic policy upon himself. He wasdictatorial and pushed aside the country's central bankers as well as ministers to take full controlof the economic policy. He called himself the economist in chief and punished each singleindividual that appeared to question his authority and the ability to make all the economicdecisions on his own. This alienated other countries and caused Malawi to lose foreign aid fromthe Britain and the United States of America (Hill, 2015). The demand for coffee and tea whichwere Malawi's primary exports dropped in a significant way due to reduced quality of theproducts. President Bingu Wa Mutharika, in addition, refused to devalue the Kwacha arguingthat it will cause price inflation as well as hurt the poor people. He said the devaluing the CURRENCY TROUBLE IN MALAWI: CASE STUDYcurrency further would invite national economic depression and that he would not buy economicorthodoxies which will hurt the citizens.He also refused to meet with the IMF delegation whovisited to try and solve the crisis arguing that they were too junior.Why did Mutharika resist IMF calls for currency devaluation? If he had lived andremained in power, what do you think would have happened to the economy of Malawiassuming that he did not change his position? President Bingu Wa Mutharika resisted the IMF calls for currency devaluation because hebelieved that it would cause price inflation in the nation which would, in the long run, hurtMalawi's poor individuals together with households (Hill, 2015). If Mutharika had remained inpower assuming that he did not change his position, I think that the economy would havecontinued to fall up to the point of total collapse because he was not willing to listen to advicefrom any other person. Because the President had total control of the economy the conditionswould have worsened and there would be increased cost of living together with increased pricesof commodities.Now that the Malawi's currency has been devalued, what do you think the economicconsequences will be? Is this good for the economyThe price of the Malawi exports will be lower in foreign currencies. This will increase thecompetitiveness of Malawi exports and should cause an increase in demand for Malawi exports.The price of imported goods in Malawi will increase thus reducing its spending on imports, andin the long run, the people will more likely purchase domestic goods. Devaluation of thecurrency will also make the foreign countries such as the, USA and Britain increases their aidalthough it might have a short-term effect of increased inflation (Pettinger, 2016). Devaluation of "