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Peter Mutharika upbeat on economy

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Malawi President Peter Mutharika has projected continued rise in the country’s foreign exchange reserves courtesy of the ongoing tobacco marketing season and the resumption of aid by the International Monetary Fund (IMF).

In his state of the nation address delivered in Parliament last week, Mutharika said the increase in foreign exchange reserves has managed to anchor the stability of the kwacha.

A recent World Bank biannual economic monitor said Malawi’s foreign exchange reserves increased early this year due a debt sold to PTA Bank at US$250 million by the Malawi government.

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The World Bank also said the government decision’s to direct all commercial banks to meet liquidity reserves on foreign exchange in the local currency as well as the setting of a minimum daily trading amount for all forex bureaus helped in the stability of the kwacha.

New central bank guidelines that mandated that only a daily minimum trade amount of US$250,000 should justify movements in the exchange rate among all foreign exchange dealers also contributed to the favourable exchange rate on the market, according to the World Bank report.

In his address, Mutharika said the increased foreign exchange reserves have prompted a rise in import cover to more than three months and has also led to a drop in inflation following decreases in prices of petroleum on the local market.

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Mutharika further projected that inflation will continue to be on a downward trend and will reach an annual average rate of 12 percent in 2016 due to combined effect of the stable exchange rate and a significant decline in global oil prices.

The World Bank, in its report, said increased confidence and soared foreign reserves have helped Malawi achieve an improved economic status.

The report shows that Malawi registering a gross official resource of US$515.5 million worthy to cover 2.4 months of import, compared to year 2013 when the total value stood at US$ 397.0 million or 2.0 months of import cover.

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