The Reserve Bank of Malawi (RBM) has called for increased production to boost the country’s foreign exchange (forex) supply.
RBM director of financial markets, who is also Monetary Policy Technical Forum chairperson Chakudza Linje, said this yesterday during a forum in Mzuzu.
She said the country is experiencing forex challenges because it does not produce and export enough goods.
Said Linje: “The issue that came out during the forum is the cost of production in the country because of the environment that we are in.
“We have some initiatives where we are bringing together financiers as well as those that have bankable projects that will increase production and how we can finance those projects.”
She, however, said the policy rate which the Monetary Policy Committee (MPC) maintained at 26 percent, will move depending on fundamentals on the ground, including risk factors.
Questions from participants mostly focused on forex challenges facing Malawi.
Alice Chemula, representing First Capital Bank in Mzuzu, feared that the forex challenges could lead to high unemployment rate as companies are already cutting down production.
Raiply Malawi Limited marketing manager Prateesh Babu asked RBM on the measures being taken to increase forex availability to sustain local companies that depend on imported raw materials.
The International Monetary Fund last week said Malawi could encounter a $2 billion (about K3.5 trillion) deficit in its net international reserves (NIR) by the end of this year.
NIR is the difference between a country’s readily available foreign assets and its short-term foreign currency liabilities.
The $2 billion constitutes roughly 20 percent of the country’s gross domestic product currently valued at $11 billion (about K19.2 trillion).
