Reserve Bank churns out conflicting stands
The Reserve Bank of Malawi (RBM) is coming up with two parallel stands regarding the position of the country’s foreign reserves.
In its publications the central bank says Malawi has $425 million of foreign exchange reserves, which means 3.29 months of import cover.
But when put on the spot by the media this week, RBM’s Governor Perks Ligoya said authorities require $200 million to save the economy from a complete collapse.
Ligoya’s revelation is a direct admission that fiscal systems in the country don’t have adequate forex amounts despite data from the central bank showing months of import cover.
“The $200 million will unlock a lot of blockages that have built up in the system. For example, we want in the very short run that there are no petrol queues in the stations and that we have enough money to assure the market of provision of fuel for the next month or so,” Ligoya said.
He said he is assured that once the money is sourced acquisition and importation of all government priorities such as fertilisers and drugs will be sorted.
This vindicates public fears that RBM is including forex held in Foreign Denominated Accounts (FCDAs) when calculating Malawi’s forex position.
These developments are coming at a time when supplies for basic necessities in the economy such as fertiliser, fuel and medicines are going thinly low.
The sad fact on the ground is, continued shortages of fuel has presented wide bottlenecks in the economy as goods cannot move from one point to another.
By the end of the day consumers are being forced to pay more for commodities and public transport with court battles on the recent fuel price increase.
Currently donors continue to withhold $500 million meant for budgetary support because Malawi’s programme with the International Monetary Fund has gone off track due to non-adherence of macro-economic policies, on eof them being the ‘over-valued’ local currency, Kwacha.
IMF also suspended a 3 year $80million Extended Credit Facility meant to cushion the economy which was accorded after the global financial crisis.
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