Malawi's Bold Move: Tourists to Pay in Dollars to Boost Reserves

Malawi is implementing significant changes to bolster its foreign reserves.

Tourists Must Pay in Hard Currency

• Tourists will now be required to pay for hotel stays using dollars, euros, or other strong currencies.
• This move aims to increase the inflow of hard cash into the country.

Government's Motivation

• The finance minister announced the changes due to declining foreign reserves.
• The International Monetary Fund (IMF) stopped providing credit, and donors reduced support.
• Malawi is seeking new ways to secure foreign currency.

New Rules for Tourism Businesses

• Tourism businesses will need special licenses to handle foreign exchange.
• These licenses will allow them to deal directly with the central bank.
• The goal is to maximize foreign currency retention and close loopholes.

Exporters Face Tighter Deadlines

• Exporters must now repatriate earnings within 90 days, down from 120 days.
• They must also surrender any leftover foreign currency after paying for imports.

Ban on Short-Term Foreign-Exchange Derivatives

• Malawi is banning short-term foreign-exchange derivatives.
• These contracts are used to bet on or protect against changes in the kwacha.
• The government claims abuse of these contracts and will only allow them with stricter regulations.

A Major Shift for Malawi

• These changes show Malawi's effort to better manage its finances.
• The effectiveness of these measures remains to be seen.