RBM Reassures Public on Foreign Exchange Amidst Tobacco Market Closure

The Reserve Bank of Malawi (RBM) has moved to calm public fears over potential foreign exchange shortages as the tobacco marketing season draws to a close.

While acknowledging the vital role of tobacco in the country’s economy, RBM Director of Public Relations, Dr. Mark Lungu, assured the public that alternative sources of foreign exchange are available.

Dr. Lungu says that the country still faces a significant foreign exchange gap despite increased tobacco earnings compared to the previous year thereby contributing to foreign exchange reserves.

“What the country also needs to know is that tobacco, this year, it has been a good year. We have received, I think the numbers that I have off my head are 386 million US dollars, which is good compared to last year. But that’s not enough to cover the whole of our input bill. That means we still have some other sources of foreign exchange. So, people should not panic because the tobacco market is closing because there are other sources where we get foreign exchange from,” he said.

However, the central bank has encouraged the diversification of the economy to reduce reliance on tobacco. Dr. Lungu emphasized the potential of other agricultural products to contribute to foreign exchange earnings.

“We have relied on tobacco for too long. So maybe we need to go that side as well to make sure that we have multiple sources of foreign exchange. So, we can’t look down upon legumes and all other places that we produce as a country. We need to go that route. We continue with the tobacco, but we need to diversify. So much as they’re giving us little now, but I’m sure in future if we intensify and enhance production of the same, they should be able to complement the tobacco that we have at the moment,” he concluded.

While commending the government’s efforts in controlling money supply and non-food inflation, the RBM remains vigilant about food inflation, which is primarily driven by supply-side challenges.