Malawi’s import cover continued to drop in the past 12 months, recorded at $591.51 million or 2.37 months’ worth of imports in June 2024.
The value is 18 percent down from $729 million or 2.92 months’ worth of imports recorded at the same time last year.
The figures are according to the Reserve Bank of Malawi (RBM) Daily Financial Market Developments report published on Thursday.
The report shows that the lowest amount of foreign exchange reserves was recorded in February 2024 at $540.33 million or 2.16 months of imports.
In a recent interview, RBM Governor Wilson Banda said he was confident that the situation would improve in the short to medium terms.
But reacting Thursday, Economics Association of Malawi President Bertha Chikadza said the country is in a difficult situation.
She, however, said despite being low, the import cover position remained stable during the past quarter.
“Export revenues have been declining while imports remain virtually inelastic. This underscores the fact that there is a need for export diversification as agricultural exports fetch low prices and low revenues on the international market unlike processed or products with value addition.
“The current trends suggest that the outlook for the following quarter remains mixed. We expect further declines or stabilisation at lower levels of import cover,” Chikadza said.
In a separate interview, economist Marvin Banda said at -$137.49 worse off than in June last year, the country’s reserves position entails continued economic challenges.
He said policy shocks that led to currency realignment have yet to manifest tangibly the promises of devaluation which was touted to boost economic activity as part of attaining the Extended Credit Facility.
“External debt repayments have had a disastrous effect on fiscal consolidation efforts which worsened during the 44 percent devaluation.
“These repayments handicapped the Treasury during the first half of the year and will continue to do so in the foreseeable future,” Banda said.
Malawi needs at least $750 million to have the internationally recommended three months import cover.
