Forex bills were underestimated, Mutharika run the forex reserves dry

The Ministry o f Finance has said the country’s outstanding foreign currency arrears accumulated due to lack of foreign currency were way beyond the US$1 billion as initially estimated.

Deputy Minister of Finance Ralph Jooma told a press briefing in Lilongwe on Friday that despite receiving a total of US$800 million from donors as well as earnings from exports, the import cover still remains below the comfort line due to underestimated arrears.

“We had estimated that the foreign arrears that needed to be cleared were around US$1 billion. But we have just realised that it was much higher,” said Jooma.

He said with the under performance of export sectors like tobacco, the foreign exchange situation in the country has refused to improve.

He said, however, that despite the import cover consistently remaining at below one month, a lot has been done to clear the arrears in addition to meeting current import bills for fuel, fertilizer and medicine importation.

Jooma said the approval by International Monetary Fund (IMF) of Malawi’s first review of the Extended Credit Facility (ECF ) programme is indicative of the government’s good performance on the programme.

The deputy minister said, however, recent budgetary support disbursements from the IMF, the European Union, the United Kingdom and Germany should see the situation improving