Malawi’s foreign exchange reserves dropped by $33.5 million (about K59 billion) in March 2025, despite a narrowing trade deficit, raising fresh questions about the country’s external sustainability amid rising imports and falling exports.
The Reserve Bank of Malawi (RBM) March 2025 Monthly Economic Review data shows that official reserves declined to $536 million (about K939 billion), an equivalent to 2.1 months of import cover from $569.5 million (about K996 billion) in February.
on the kwacha. | Nation
This came even as the trade deficit narrowed to $234.8 million from $261.1 million the previous month, according to the RBM.
Scotland-based Malawian economist Velli Nyirongo in an interview, warned that the persistent trade deficit and weakening reserve position would “exert downward pressure on the value of the Malawi kwacha”.
“Reduced export earnings could also complicate the government’s ability to service its external debt obligations,” he said.
A local businessperson expressed concern over the growing difficulty in accessing foreign exchange through formal banking channels.
She said many traders are now relying on informal offshore transactions to source goods.
Said the entrepreneur: “If you want to buy something, you have to deposit funds in local accounts owned by Malawians in the diaspora.
“The person then buys the things for you and ships them to a selected address.”
During the review period, export earnings dropped to $30.1 million in March from $32.7 million in February, representing a 7.8 percent month-on-month decline and a sharper year-on-year contraction from $41.1 million recorded in March 2024.
The fall was primarily driven by a collapse in tobacco earning, Malawi’s main foreign exchange earner, which fell to just $3.0 million from $11.3 million in February. The RBM attributes this to either weaker global demand or delays in market deliveries at the onset of the selling season.
On the expenditure side, Malawi spent $264.8 million on imports in March, down from $293.7 million in February.
This was still higher than the $235.5 million (about K411 billion) recorded in March 2024, highlighting the economy’s continued reliance on foreign goods despite tight monetary conditions and a depreciating kwacha, according to analysts.
However, the composition of imports showed a growing tilt towards consumption and non-productive assets.
