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BLANTYRE.
MALAWI is seeking to secure a US$50 million foreign exchange credit line to replenish its low fuel supplies, Finance Minister Ken Kandodo told parliament on Friday.
“We want to ensure the availability of the commodity on which the economy runs,” he said.
The country, dependent on tobacco export receipts averaging US$400 million annually, needs between US$300-US$400 million for its annual fuel bill.
Kandodo said motorists had been inconvenienced by lack of fuel, saying the landlocked country which depends on road transport routes to truck in fuel from neighbouring Mozambique and Tanzania, had only one-and-a half days of stock.
With no storage capacity, the country wants to build its fuel reserves to last 45 days.
“It is affecting the economy and the way of life of Malawians,” he said.
Kandodo said fuel shortages had been compounded by an order by the International Monetary Fund that all tobacco proceeds, which cover up to 70 percent of Malawi’s exports, should be deposited to commercial banks and not the Reserve Bank of Malawi.
“The commercial banks were not prioritising on the strategic imports of fuel, fertiliser, medical drugs and raw materials,” he said.
Kandodo said the government had now reversed the IMF order, saying from this year, all tobacco proceeds would be deposited to the central bank for “strict control”.
The IMF and the World Bank are the major sponsors of the country’s tough economic reforms.
Healthy economic growth, which has risen to 7 percent over the past few years after decades of being stuck at two percent, has increased demand for fuel.
Malawi, which has over 120 000 vehicles, burns over 30 million litres of fuel every month.
The Southern African nation has been failing over the years to diversify its economy to generate foreign exchange, away from tobacco. — AFP.