US ban could worsen forex woes—analysts
Economic analysts have expressed fears that the temporary ban on foreign imposed by the US government could worsen the forex shortages the country is experiencing in the short to medium term.
The concerns follow an announcement from the US government that President Donald Trump’s administration has paused all foreign assistance funded by or through the State Department and United States Agency for International Development pending review.

The move will reportedly cost Malawi about $284.7 million in foreign aid.
Catholic University economics lecturer Greenson Nyirenda said the loss could worsen the country’s forex crisis.
“The funding by international organisations remains one of the significant sources of forex for countries like Malawi that have low exportation capacity. This will hit hard,” he said.
Echoing Nyirenda’s sentiments, Scotland-based Malawian economist Velli Nyirongo warned that the reduced forex availability could strain reserves, weaken the government’s ability to meet external obligations, and destabilise the exchange rate.
“Over time, sustained aid withdrawal may exacerbate fiscal imbalances, forcing the government to seek alternative financing through increased borrowing or expanded export earnings, both of which may take time to materialise,” he said in a WhatsApp response.
Nyirongo further said policy makers may need to tighten monetary policy, diversify export earning, strengthen remittance inflows, and secure alternative funding from multilateral institutions or regional trade agreements.
Figures from the Reserve Bank of Malawi (RBM) show that total forex reserves in November had dropped to $516.9 million (2.1 months of imports) at the end of November 2024, far below the 3.9 months of import cover recommended by multilateral institutions such as the World Bank and the International Monetary Fund (IMF).
This is also lower than the $568.9 million (equivalent to 2.3 months of imports) recorded in November 2023, when the government devalued the kwacha by 44 percent as part of a broader set of reforms to restore macroeconomic stability.
The analysts observed that the pause, if prolonged, could deepen economic instability.
In December last year, the government introduced a new set of forex controls that would require public institutions, including research institutions and public universities with donor-funded projects to open foreign-denominated accounts at RBM.
They will also be required to convert 80 percent of their foreign currency receipts into Malawi kwacha, and non-governmental organisations will be required to convert 70 percent of their forex receipts into the local currency.
The move split opinion with one section of economic analysts saying it would help contain the parallel forex market. In contrast, another section said it would incentivise traders to use the black market.