RBM governor banks on K85bn fuel facility

Reserve Bank of Malawi (RBM) Governor Charles Chuka has expressed optimism over a $250 million (about K85 billion) fuel facility released by the PTA Bank, a development financing arm of the Comesa.

The RBM boss said on Thursday in Malawi’s capital, Lilongwe, when signing the facility on behalf of Malawi Government that the resources will significantly ease pressure on the foreign exchange market and alleviate the current fuel shortages.

Chuka described the timing of the facility as critical and hoped that it will help the country to import fuel, whose supply continues to be erratic in most parts of the country.

The facility, according to PTA Bank, is intended to support the importation of fuel and other critical imports such as fertiliser, among others.

Chuka said on the sidelines of the signing of the agreement that the facility will likely bring about energy security apart from aiding the country properly implement its recovery plan.

“This facility will ensure that the economy properly recovers in next year and we need to make sure that we have fuel and fertilisers in time in the next coming season,” he said.

The agreement is under Strategic Structured Commodity and Trade Finance Facility (SSCTFF) for PTA Bank, which is a financial intention instrument developed by the bank in support of strategies laid by Malawi Government to sustain importation of critical commodities into the country.

Chuka said at a time when export of tobacco, the country’s principal export crop, and sugar have not significantly earned Malawi enough foreign exchange, such PTA Bank resources is a relief to authorities.

The resources, which exceed $177 million which the country earned from tobacco this year, if properly managed and allocated to intended purpose, could significantly ease the erratic supply of fuel and also help normalise the availability of drugs in hospitals, among other critical imports for Malawi.

PTA Bank president Admassu Tadesse, who described the facility as a transformation deal expressed hope that the funds will foster energy sustainability through petroleum imports and increased support towards smallholder farmers who contribute over 70 percent of agricultural output.

He said SSCTFF is specifically intended to enhance food and energy security for Malawi as well as sustaining ongoing poverty reduction efforts by focusing on promotion of ongoing agrarian reforms.

“The $250 million signed today demonstrates PTA Bank’s commitment towards supporting the development agenda for the Republic of Malawi through intervening critical economic sector by development of short-term resources to catalyse the country’s economic development through trade,” said Tadesse.

He said the bank is also complementing government’s efforts towards reducing and averting stock-outs of petroleum products to avoid their negative impact on economic activity.