Forex shortages could affect evenue collection—MRA

Public tax collector Malawi Revenue Authority (MRA) has hinted it could face challenges in some tax lines due to the unavailability of forex in the country.

In an interview on Tuesday, MRA commissioner general John Bizwick indicated that the development, which has affected the economy, could see the country lose out on revenue.

He said given that most of the country’s products are imports, there has been an impact on revenue collection.

Said Bizwick: “About 30 percent of our revenue collection comes from trade taxes and now that we do not have enough forex in the country, that should affect revenues.”

The commissioner was, however, quick to mention that the tax collection agency is looking at ways to ensure that the country does not lose much in terms of revenue.

In the 2022/23 financial year, government projects total revenues and grants at K1.956 trillion.

Of the K1.956 trillion, domestic revenues are estimated at K1.636 trillion, of which tax revenues are estimated at K1.528 trillion while other revenues have been estimated at K107.8 billion.

Meanwhile, local businesses have indicated that most of them have been affected in terms of turnover, production, and availability of inputs, goods and services due to scarcity of forex.

Black Indigenous Business Network trustee George Macheka told Business News that the forex situation, which has burdened businesses calls for strong efforts in terms of import substitution and diversification of the country’s export base.

 On his part, Cross-Border Traders Association of Malawi president Steve Yohane agreed with Macheka, saying the forex scarcity has hit traders hard. 

He said the current business environment has proved difficult for traders in international businesses in view of the forex situation.

“The unavailability of foreign exchange on the market from time to time is making our business difficult. Prices of items have kept changing making it hard to plan and make reasonable business,” said Yohane.

Malawi is currently facing forex shortages with data showing that gross official reserves under the direct control of the central bank dropped by 2.83 percent to $374.48 million as at March 31 2022 from $385.40 million in February.

The drop in the reserves position, according to market analysts, reflects the increasing burden on the central bank to support the foreign exchange market with liquidity to help in smoothening the rate of depreciation.

Reserve Bank of Malawi Governor Wilson Banda is on record as having indicated that the central bank is looking at both short and long-term solutions to avert the forex situation.