The Reserve Bank of Malawi (RBM) insists that shortage of fuel emanating from foreign exchange scarcity is temporary.
Ironically, this comes at a time the situation is worsening, with most motorists and other fuel users in panic mode.
But speaking during Times Talk radio Programme on Times Radio on Monday, Deputy RBM Governor William Matambo said the situation was not grave for people to panic.
Figures he presented show that the country now has forex worth 1.5 months of import, which is way lower than the internationally recommended three-month worth of imports.
He said the central bank was, however, rationing the allocation of forex.
“I want to assure people that the fuel issue is temporary and the situation will normalise because the issue was a shock in the system and we are now dealing with it. Things should be okay in the next few weeks because we have given fuel importers foreign exchange,” he said.
Matambo blamed the situation on the country’s insatiable appetite for imports, coupled with the war in Ukraine and the Covid pandemic, which he said dwindled Malawi’s production capacity.
He said import substitution remains a lasting remedy to the forex challenge which is largely structural in nature.
But in the interim, according to Matambo, measures have been undertaken to intensify mobilisation of forex.
The country needs approximately $3 billion per year to finance its import bill, but only generates $1 billion.
And fuel imports requirement, pegged at $600 million per year, forms a larger part of the import bill.
At least $80 million is needed for the country to normalise fuel supply, according to a consortium of fuel importers, Petroleum Importers Limited General Manager Martin Msimuko.
But commercial banks are now rationing supply of the forex, a clear indication that the coffers are almost dry.
On a monthly basis, PIL brings into the country fuel, between 20 million and 22 million litres which cost between $20 million and $22 million bringing the total requirement annually to $240 million.
Speaking during the official opening of an investment summit weeks ago, President Lazarus Chakwera admitted that lack of foreign exchange has disturbed fuel importation.
“We have therefore already secured $28 million from local banks for this purpose, and we are in pursuit of another 50 million dollar facility for the same, on top of instructions the Reserve Bank has received to prioritise fuel procurement in the allocation of any forex we secure,” Chakwera added.
Since late last month, Malawi has been struggling to secure imports due to foreign exchange shortages and economists have expressed fear that if the situation continues it may also affect agriculture.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.