Gross official foreign exchange reserves position went down to $267.91 million in July, representing 1.07 months’ worth of imports.
This is according to figures from the Reserve Bank of Malawi (RBM) quoted by local financial advisory firm, Bridgepath Capital, in its August 2023 Monthly Economic Review.
The report indicates that during the preceding month of June, the reserves were at $321 million.
“The import cover for gross official foreign exchange reserves decreased by 17.1 percent to 1.07 months in July 2023 from 1.29 months in June 2023,” the report adds.
The increase in June was the highest since November 2022, when the gross official foreign exchange reserves were at $338 million, representing 1.36 months of import cover.
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Financial Market Dealers Association of Malawi President Leslie Fatch said the improvement in June was a result of retention policy on export proceeds and tobacco proceeds considering the increased flows to the tobacco market by them.
He indicated that the sustainability of the positive performance was dependent on efforts to improve the supply of foreign exchange.
“The increased cover works in the interim and we hope there are sustainable efforts to maintain the growth in the long run,” Fatch said.
Economist from Malawi University of Business and Applied Sciences Betchani Tchereni said the drop is a result of dwindled exports, yet the country continued to import.
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He said all eyes are on the International Monetary Fund for a possible Extended Credit Facility programme that would help boost the country’s Balance of Payment position.
“Without that, the lean period may be passed with very tough decisions to be undertaken,” Tchereni said.
