The Reserve Bank of Malawi (RBM) has unveiled plans to boost import cover from the current three to six months to ensure the country has enough foreign exchange reserves.
But Economics Association of Malawi (Ecama), while welcoming the plan, argues it requires the intervention of various players.
Speaking during a town hall meeting in Mzuzu on Friday, RBM director of strategy and risk management Ralph Tseka said the ambitious target is contained in the central bank’s 2019-2021 Strategic Plan.
Economists argue that foreign exchange reserves that can cover a minimum of three months’ worth of imports are adequate.
Tseka said in the previous strategic plan, RBM planned to maintain three months import cover, but managed to go up to 3.6 months.
He said the central bank has put in place measures to increase import cover to ensure seamless importation of goods and services
Tseka said, among others, the central bank plans to improve diaspora remittances.
Figures from RBM show that diaspora remittances increased to $186 million (about K137 billion) at the end of December 2018 from $38 million (about K28 billion) during the previous period.
Tseka said this year, RBM wants to improve diaspora remittances to $500 million (K370 billion).
Ecama president Chikumbutso Kalilombe, in an interview, said apart from monetary policy, the central bank will need the backing of fiscal authorities to achieve the desired feat.