Reserve Bank of Malawi (RBM) says it has finalised the process of formulating measures aimed at crushing the parallel market foreign exchange supply as a key price stabilisation strategy.
Speaking after a closed door meeting with key stakeholders including the Ministry of Trade and Industry, Malawi Revenue Authority, Financial Intelligence Authority, Competition and Fair Trading Commission and the Ministry of Justice, RBM Governor MacDonald Mafuta Mwale described the policy as key to control market distortions.
He, however, declined to disclose the proposed policies, saying they will be announced during the presentation of the 2025/26 National Budget by Minister of Finance and Economic Affairs Simplex Chithyola Banda this Friday.
Mafuta Mwale said other recommendations are still being reviewed by legal experts.
He said: “We have discussed with relevant stakeholders and now we are ready to start implementing the measures that we have come up with.
“I will not disclose the measures because some of them are still undergoing clearance from our legal minds and others will be announced in the budget which the Minister of Finance will present this Friday.”
On reports that some top government officials were secretly supporting the parallel market by supplying it with forex, Mafuta Mwale dismissed them as empty.
However, he admitted that his office has received the same reports, but he needs to verify to find clear evidence.
The governor, who acknowledged the spread between the parallel and official exchange rate which hits K5 000 to a dollar in other instances compared to the K1 751 official rate, ruled out a possible realignment.
Mafuta Mwale stressed that the parallel rate remains misleading and once the proposed measures are implemented, he is sure sanity will prevail on foreign exchange market.
Minister of Trade and Industry Sosten Gwengwe said his ministry was determined to enforce price reductions once the black market rate is dealt with as it is the sole factor leading to price escalations.
He said: “The recent price escalations are not because of supply, the products are there, but it is because [traders] buy forex on black market.
“So, we are determined to enforce fair prices if this challenge is resolved.”
Gwengwe further said his ministry will present policy recommendations that would provide incentives for exports such as reviewing the directive that mandates exporters to surrender 30 percent of export proceeds to RBM.
The government’s efforts come at a time other stakeholders have been calling on the RBM to consider realigning the exchange rate to stabilise the economy.
Some companies have scaled down production while others have since closed due to forex scarcity which makes it difficult to access raw materials.
