Malawians have a long way to go before they see stability in forex availability and supply of some essential imports as the country’s official foreign exchange reserves position maintained a downward spiral.
According to figures from financial advisory firm, Bridgepath Capital, as of October 31 this year, Malawi had $754 million in forex reserves. This was a 1.60 percent decrease from $766 million reported as of September 30 2022.
The drop in foreign reserves is a result of a mismatch between supply and demand, according to the Financial Market Dealers Association (Fimda).
The association’s president Leslie Fatch, however, said tightening of monetary policy could help contain the pressure.
Fatch said in the short-to-medium terms, there are three key pressure points which need to be addressed if the foreign exchange problem is to be dealt with.
“We need to make sure that export proceeds really come into the country. We need to close all loopholes of forex externalisation to safeguard the little we have and we need to limit importation towards economy stimulating imports and suspend other non-essential imports,” the Fimda president suggested.
Last week, our sister paper, Malawi News, quoted the Reserve Bank of Malawi Governor Wilson Banda as admitting that the country is in a tight spot.
Banda said the country is banking on donor support, especially the International Monetary Fund through the expected Extended Credit Facility and the Rapid Credit Facility programmes which will inject liquidity into the system while working as a green light for other institutions and countries to support Malawi.
“The government has embarked on mega farms project; so, I think we want to turn that into fruition in the next season.
“But, also, we have taken precautions in case we do not get normal rains. We have lined up a lot of irrigation programmes,” he added.
Lately, Malawi has experienced an acute shortage of fuel due to the prevailing forex scarcity.
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Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.