World Bank faults forex measures
The World Bank has faulted monetary policy measures aimed at rebuilding foreign exchange reserves, saying they have had little impact on boosting reserves and could be detrimental to investment.
In its latest Malawi Economic Monitor, the Bretton Woods institution has cited the re-introduction of customs declaration forms for exports to help track forex flows and ensure that all export earnings are repatriated to Malawi.
Under the measure, exporters whose export value exceeds $2 000 (about K2 million) are mandated to declare these through an electronic form in line with the Exchange Control Regulations of 2022.
The bank said this measure could have an adverse impact on attracting new foreign direct investment.
Reads the report in part: “Other than attracting new investment, this could also and potentially undermine the competitiveness of the domestic private sector that may not be able to import critical inputs for production or services they provide.”
Economist Bond Mtembezeka said in an interview foreign exchange shortage is a capacity issue.
“We can have these measures in place but if there is little to export, the forex shortage problem will persist indefinitely,” he said.
Financial Market Dealers Association of Malawi president Leslie Fatch urged authorities to devise ways for sustainable trade balance improvement where focus should be on import substitution, managing consumer appetite for imports, industrialisation and promotion of exports.
Malawi requires $3 billion per year to meet its import requirements but generates less than $1 billion, which is a third of the country’s import needs, according to RBM data.
