Forex reserves hit lowest level – The Times Group

Forex reserves hit record low – The Times Group

Post was last updated: April 17, 2026

Key Business Points

  • Malawi’s foreign exchange reserves hit a historic low in August 2025, raising concerns over import cover and economic stability.
  • The government projects reserves will improve by mid-2026 due to tighter forex management and inbound investment in the health sector.
  • Economists warn structural reforms and export growth are critical, as tobacco season and IMF talks can only provide short-term relief.

Malawi’s official foreign exchange reserves plummeted to a record low of $70.3 million (0.28 months of import cover) in August 2025, less than half the level seen at the start of the year. The Reserve Bank of Malawi’s latest Financial and Economic Review confirmed the drop, highlighting a steep decline from $180.4 million in January. This crisis marks the lowest reserves across a three-year span tracked in the report.

For context, 2023 ended with a healthier position of $240.5 million (0.96 months of import cover). Even 2024, while weaker at $163.9 million (0.66 months) by December, had not signaled the severity of the downturn that followed.

Analysts from Bridgepath Capital Malawi noted reserves fluctuated between $536 million (2.1 months) in March 2025 and $511.8 million (2.0 months) by September, before the August collapse. The crisis exposes long-running imbalances in Malawi’s economy, said economist Marvin Banda, who warned that fiscal deficits, high import demand and stagnant export earnings are undermining external buffers. He stressed that quick fixes like IMF programs or tobacco proceeds won’t restore stability alone.

Bertha Chikadza, president of the Economics Association of Malawi, said a successful IMF agreement could help reassure donors and trigger additional inflows. She added that while the tobacco marketing season may deliver a temporary forex boost — depending on prices — sustainable recovery depends on structural reforms. Treasury spokesperson Williams Banda responded with optimism about medium-term reserves growth, citing stricter forex regulations and a $900 million health sector investment set to bring much-needed hard currency.

The gap between outlook and on-ground constraints reflects a familiar trade-off: policymakers hope large-scale projects will offset chronic shortfalls, yet economists warn stability requires shifting trade fundamentals. For business owners and entrepreneurs, these dynamics mean tighter access to foreign currency in the short term, but potential easing if foreign capital flows gain traction in health and other sectors. Whether the government’s growth strategy can deliver lasting import cover may be the most important measure for Malawi’s economic outlook in the year ahead.

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Vanessa Banda
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