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‘Govt in forex negotiations’

Finance Minister Simplex Chithyola Banda says government is in bilateral negotiations to unlock foreign currency inflows.

Chithyola disclosed this at a time the country’s economy remains weak; crippled by foreign exchange scarcity, low production levels that fail to satisfy demand and eventually leaving inflation and interest rates elevated.

Chithyola: Foreign exchange is an urgent challenge affecting economy

In an interview on Friday, he, noting that the urgent challenge affecting the economy is foreign exchange supply, said addressing forex shortages requires both immediate and long-term interventions.

“In the short term, we are negotiating bilateral agreements with countries to secure forex inflows. For the long term, we are focusing on diversifying our exports through mining, agriculture, and labour export.

“We are also introducing import substitution policies to reduce reliance on imported goods by promoting local manufacturing,” Chithyola said.

On the economic performance, he said Malawi’s economic challenges are not new, but have been compounded by years of overdependence on consumptive budgets, limited diversification of revenue sources and external shocks.

“Mega Farm Project is central to our agricultural transformation agenda. It involves consolidating underutilised land to create large, mechanised farms that produce high-value crops for both local consumption and export.

“This initiative ensures food security, reduces reliance on imports, and provides employment opportunities,” Chithyola said.

In an interview yesterday, Mzuzu University-based economics lecturer Christopher Mbukwa said the foreign exchange reserves can improve primarily by increasing the exports of goods and services, attracting foreign direct investment, getting remittances from citizens living abroad, and catalyzing tourism.

Mbukwa said: “Of these, the one is straightforward, and we can have direct control raising our exports. We can quickly identify some value chains that are exportable, grow them under mega farms projects, and have Admarc coordinate their exports.

“In the immediate time frame, we need to fund Admarc so that it does aggregate various exportable agricultural commodities in the months of May to July and then identify export markets which I know are available.”

Reserve Bank governor MacDonald Mwale said the main challenge facing Malawi is that the economy is not producing; hence, the supply of products is limited and consequently affecting exports and forex supply.

Mwale has since encouraged enterprises and individuals to utilize the credit reporting and asset-based lending saying this could enable access to capital as private sector players could easily borrow for production using movable assets like livestock as security.

Said Mafuta-Mwale: “The economy is not producing. This is providing the solution because people will use their movable assets to access capital and invest in businesses that boost production and eventually exports.

The country’s gross official reserves in Reserve Bank custody have been below the internationally recommended level of three months import cover -a situation that made importation of pharmaceuticals and petroleum among others, difficult.

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