RBM loosens grip on diplomats
Reserve Bank of Malawi (RBM) has a l lowed foreign missions and international non – governmental organisations (INGOs) in the countr y to quote remuneration for their staff in foreign currency.
The approval follows a request the international community made to the central bank to al l ow them access their money in foreign currency, and not Malawi kwacha, after government introduced regulations that prohibited the same.

The Exchange Control (Use of Foreign Currency in Local Transac tion) Regulations 2006 forbid quoting and demanding payment in foreign currency for goods or services sold or provided in the country.
RBM granted the approval to the international community last month through the Non – Governmental Organisations Regulatory Authority (Ngora).
INGOs Forum chairperson Kate Hartley- Louis said the arrangement was being implemented and many organisations had already put it in place by writing to the ministries of Finance and Labour, among others.
Ngora chief executive off icer Edward Chileka Banda confirmed t h e development in an interview, saying the central bank had granted exceptional approval with detailed conditions.
Communication f rom the Ngora boss to the chairperson of INGO Forum dated January 23 2025, also confirms RBM’s decision on the matter.
Reads the letter: “I am pl eased to inform you that the Reserve Bank of Malawi (RBM) has granted an exceptional approval allowing embassies and international organisations to quote salaries for their staff in foreign currency.”
The bank said, in its letter to Ngora CEO dated December 20 2025, i t granted the approval with some conditions.
Among the RBM conditions, salar ies for expatriate staff employed in embassies and international organisations may be quoted and paid in foreign currency.
Further, salaries for expatriates staff employed in other organisations may be quoted in foreign currency for payment in Malawi kwacha.
Finally, salaries for local staff employed in embassies and international organisations may also be quoted in foreign currency but paid in Malawi kwacha equivalent.
“This exceptional approval supersedes the approval that was granted through our letter dated August 15 2022,” reads RBM letter to Ngora signed by former governor Wilson Banda.
On his part, the Ngora CEO said the development would help attract and retain skilled expertise by offering competitive compensation aligned with global standards.
“The same protects employees from exchange rate volatility, ensuring stable purchasing power in fluctuating economies like ours. Additionally, it provides predictabi l ity for employers and employees, aiding financial planning and minimising currency-related uncertainties.
“Moreover, t h i s p rac t i ce aligns with international salary benchmarks, ensuring fairness and consistency within diplomatic missions and international NGOs,” said Chileka Banda.
However, h e said Ngo ra recognises the potential risks associated with the pol i c y, including increased demand for foreign currency, exchange rate pressures, and potential wage disparities between expatriates and local employees.
“To mitigate these r isk s , it is imperative to implement appropriate safeguards, such as restricting the policy to designated roles or organisations, ensuring adherence to labour laws, and closely monitoring its broader macroeconomic impact,” Chileka- Banda explained.
But financial analyst Christopher Mbukwa observed that the decision was a candid depiction of the state of the kwacha in relation to foreign currencies, which has been volatile for over three years.
He said: “As such, international NGOs and others have found it difficult to plan and implement their budgets owing to kwacha’s volatility.
“And then, considering that they mobilise resources, usually in foreign currencies, they feel there is a loss of value if they do not quote salaries in foreign currency. So, basically, I consider this as budging to pressure.”
Mbukwa, a Mzuzu University economics lecturer, emphasised the need for the piece of legislation to be reviewed to determine whether it is relevant and strong enough in light of the changing assumptions that led to its formulation.
Secondly, Mbukwa called for a rethinking of general supply-side strategies that could strengthen the country ’s position as far as enhancing foreign currency position is concerned.
The granting of the approval comes few months after RBM also introduced new exchange controls on withdrawal of foreign currency by diplomatic offices and staff.
In an Exchange Control circular No. 05/2024, RBM introduced conditions for the dealings of authorised dealer banks (ADBs) in the operational manual for cross-border foreign exchange transactions issued to ADBs on withdrawal of foreign currency by diplomatic offices and officers.
According to the new exchange control, diplomatic offices are now only allowed to withdraw foreign currency to a maximum of $15 000 while diplomatic officers are allowed to withdraw only up to $3 000.
Early this week, government laid before Parliament a motion which seeks to grant RBM authority to implement the new Exchange Control Regulations.
Secretar y to the Treasury Betchani Tchereni wrote Clerk of Parliament on January 21 2025 in fulfilment of the requirement outlined in Section 58(1) of the Constitution.
Th e n e w r e g u l a t i o n s were published in the Malawi Government Gazette Supplement dated December 13 2024 under Government Notice Number 73.
Dean of Diplomatic Corps in Malawi and Zimbabwe High Commissioner to Malawi Dr Nancy Saungweme said the approval granted by the Reserve Bank of Malawi allowing foreign missions to quote salaries for the locally recruited members of staff in foreign currency with certain conditions is not a new development as many missions have been doing that.
“The recent measures introduced by the central bank are part of the ongoing foreign currency reforms, addressing broader issues beyond the diplomatic community.
“We hope that long-lasting solutions will be found to address challenges such as foreign currency constraints, exacerbated by the El- Nino induced drought.”
Saungweme al so sa i d a s diplomats they abide by the laws and regulations of the host government and do not make policies.