Malawi’s gross official reserves remained below one month’s worth of imports as of September this year, latest figures from the Reserve Bank of Malawi (RBM) show.
According to the figures, as of end September this year, the import cover was at $242.68 million representing 0.97 months.
This represents a slight increase from $239.56 or 0.96 months of imports recorded in August.
“The economy’s total foreign exchange reserves were estimated at $641.1 million (2.6 months of imports) as at end September 2023 compared to $651.7 million (2.6 months of imports) recorded at the end of the preceding month and $715.0 million (2.9 months of imports) reported in the corresponding month of 2022,” reads a report from RBM.
Financial Market Dealers Association (Fimda) President Leslie Fatch said the situation is, however, expected to improve following approval by the International Monetary Fund for Malawi to have an Extended Credit Facility (ECF) programme.
“The authorities have assured us that the coming of ECF will unlock other support which will come in dollars, therefore if this materialises, we should be able to have a better stand on import cover,” Fatch said.
Delivering a mid-year budget statement to Parliament yesterday, Minister of Finance and Economic Affairs Simplex Chithyola Banda said the government will continue to pursue a flexible exchange rate regime.
“The government expects that as we accumulate foreign exchange reserves on account of enhanced production and increased donor grant financing following the approval of the ECF program, the exchange rate will now stabilise,” he said.
Malawi’s import cover has been dwindling over the past years due to its overdependence on imports with a lean export base.