Malawi has directed foreign visitors to pay for hotel accommodation in dollars, euros or other major currencies as the government looks to shore up its shrinking foreign reserves, Finance Minister Joseph Mwanamvekha said on Friday.
Presenting a mid-year budget review, Mwanamvekha explained that the country’s reserves have been under strain since the International Monetary Fund’s Extended Credit Facility ended earlier this year, and after several donors reduced their budget support.
Tourism businesses have now been instructed to apply for special licences that allow them to process foreign exchange directly with the central bank. Mwanamvekha said the move is intended to seal gaps in the system and preserve every unit of hard currency.
The government is also tightening rules for exporters, who will now have 90 days instead of 120 to repatriate their earnings. Any remaining foreign currency after import payments must be handed over to the authorities.
In addition, Malawi is banning short-term foreign-exchange derivatives, financial instruments used by banks to hedge or speculate on movements in the kwacha. Officials say the tools have been misused and will only be permitted again once stronger regulatory measures are introduced.