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:: Bankers see tax reversal slowing inclusion strides (10/09/14)

By Taonga sabola - The Daily Times

The Reserve Bank of Malawi (RBM) says it sees no forex crisis even after the conclusion of sales of the country's top forex earner, tobacco.

Tobacco sales, which have been a major driver of improved forex reserves, were expected to close last Friday.

Malawi's situation has been compounded by the absence of donor inflows alter development partners closed their aid taps in November last year in the aftermath of the cashgate scandal.

Speaking during the 2014 Bankers Association of Malawi (BAM) annual dinner and dance, RBM Deputy Governor, Naomi Ngwira said Malawians need not to lose sleep over the situation.

She said the flexible exchange rate adopted in May, 2012 will help Malawi maintain healthy forex levels even in the absence of tobacco and donor dollars.

Ngwira said Malawi has been without substantial donor inflows since November, 2013. Adding that the kwacha even started appreciating way before the start of the 2014 tobacco season.

"Of course we expect the kwacha to depreciate after tobacco sales but we don't see a forex crisis," said Ngwira

She said with the government addressing some of the demands from the donors, an aid rebound could even make the economy better.

Malawi's official reserves have hovered around 2.5 months of import cover during the tobacco selling season.

Finance Minister, Goodall Gondwe on Tuesday announced a MK742.8 billion national budget framed in the assumption that the country will not receive budgetary support this year.

The zero-aid budget has a MK110 billion grant element in addition to an anticipated MK43 billion aid from World Bank, African Development Bank and the European Union.

The dinner and dance provided an opportunity to the bankers to wine, dine and reflect on benefits of Basel II.

BAM president Misheck Esau said despite the fear that gripped the bankers before the start of Basel II, the bankers are reaping a lot of benefits from the accord.



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