In a recent announcement, the Treasury has taken steps to strengthen enforcement of foreign exchange regulations and promote foreign currency generation initiatives. This has been done as part of a wider effort to ensure foreign exchange availability in the country.
During the mid-year budget statement presented in Parliament last Monday, Minister of Finance and Economic Affairs Simplex Chithyola Banda outlined the government’s will commitment to policy actions aimed at ensuring that the market has adequate foreign exchange and at the same time boost holdings of gross official reserves.
Chithyola Banda said the foreign currency generation initiatives and the protection of earned foreign exchange measures are expected to complement existing regulations, such as the mandatory sale of at least 30 percent of export proceeds to Authorised Dealer Banks.
He said: “The economy needs protection, otherwise the informal unregulated market can easily surpass the formal sector where all players are protected from unscrupulous economic agents.
“Government has commenced putting in place a legal and regulatory framework that protects our economy. We want water tight legislations that would deter those that would like to play around with our economy.”
The Minister added that the Ministry of Finance and Economic Affairs will publish and gazette regulations that will include a requirement for all importers of goods and services into Malawi to show evidence of foreign currency purchase from Authorised Foreign Exchange Dealer to the Malawi Revenue Authority (MRA) before declaring goods for duty purposes at points of entry.
Chithyola Banda noted that this requirement, effective upon publication in the Gazette, applies to imports exceeding $2,000 or equivalent value in any currency.
Following this, any importer failing to provide evidence will be suspected to have obtained the foreign exchange from illegal sources, which is an offence under the Exchange Control Act, 1984, and appropriate penalties shall be prescribed in the Regulations.
In addition, Chithyola Banda said the Reserve Bank of Malawi will intensify foreign exchange compliance inspections of all financial institutions in the country, including commercial banks and authorized dealers.
He added that, the government, through the Financial Intelligence Authority and National Intelligence Services, will investigate reports from the business community that commercial bank and central bank staff (Treasury Dealers) were trading in foreign exchange at a personal premium. He said the government, through relevant institutions, will consider conducting lifestyle audits on some bank officials who are being perceived to have unlawfully benefited from the illegal forex trading in Malawi.
