The Reserve Bank of Malawi (RBM) has cleared uncertainty surrounding the currency repatriation agreement involving Malawi, Mozambique, Tanzania and Zambia announced in Malawi’s 2011/12 national budget.
The central bank says the agreement is still under discussion.
When he presented the 2010/11 national budget, former finance minister Ken Kandodo announced that Malawi and the three neighbouring countries would seal a currency repatriation pact. But since then, government has been silent about the deal, prompting economic analysts to speculate that it was a flop.
In the announcement, Kandodo said the deal would help facilitate border town trade and help Malawi to accumulate foreign exchange reserves.
RBM Governor Charles Chuka said recently they are still discussing the deal.
He, however, said they are not in a hurry to conclude the arrangement expected to boost cross border trade.
Chuka said the deal will allow central banks in the four countries to collect each other’s currencies and repatriate them to their respective countries.
“We will be able to expedite these discussions and increase our border trade. We are on right track and will do our best [on the currency repatriation agreement],” added Chuka.
Earlier, Kandodo said the agreement will allow the countries to accept each other’s currency, especially in border towns.
He said RBM already discussed with the central banks of Zambia, Zimbabwe, Mozambique and Tanzania on how best they could roll out the concept.
He said once the agreement is formalised, the four countries will be holding periodic meetings to assess its progress.
Former Economics Association of Malawi (Ecama) president Charles Mataya earlier cautioned that currency repatriation agreement may induce money laundering and worsen the problem of counterfeit currencies which he would be detrimental to economies of the four countries.