Malawi changes policy on foreign exchange to boost export

With huge a trade deficit, Malawi’s central bank has adjusted the percentage of foreign exchange exporters can keep in their accounts in a desperate bid to encourage more exports.

Previously exporters could only keep 60 percent of their foreign exchange earnings but with the new policy change they would keep 80 percent.

According to the National Statistical Office, Malawi’s trade deficit widened further in September 2012 to K34 billion (about $100m) from K26.8 billion (about $78.8m) the previous month.

Charles Chuka: RBM governor
Charles Chuka: RBM governor

Reserve Bank of Malawi (RBM) Governor  Charles Chuka announced in a recent statement that the move would work to help Malawi move closer to the exchange control liberalization framework enshrined in the SADC and Comesa protocols.

According to Chuka, the export incentive scheme commenced in 1994 with a retention or conversion ration of 10:90.

Malawi’s overall share of world exports has been declining between 1990 and 2010, the country imports as a share of gross domestic product (GDP) has been rising since mid 1990, according to the IMF.

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