The Reserve Bank of Malawi (RBM) has finished drafting a new Bill on foreign exchange to conform to new ways of managing forex.
RBM General Counsel and Bank Secretary Samuel Malitoni have confirmed of the issue.
Currently, the country has the Exchange Control Act of 1989 and the RBM is repealing it and replacing it with a new act called Foreign Exchange Act, which according to Malitoni, would not just control forex but stipulate how to manage foreign reserves.
“The world now is managing foreign exchange so the Foreign Exchange Act will emphasize on the management of our foreign reserves. Of late our the reserves have been growing; we’re consistently above three months of import cover as such what is important is that instead of controlling forex we should be managing the reserves,” said Malitoni.
Furthermore, the Bill would also introduce stiffer penalties for offenders, whom according to Maltoni, currently take advantage of light punishments in the old law.
According to the RBM General Counsel and Bank Secretary, the Bill was now at cabinet level, particularly at the Ministry of Justice and Constitutional Affairs, to be fine-tuned before it is submitted to Parliament.
“We hope that within this year it will be passed in Parliament and start operating,” said the RBM General Counsel and Bank Secretary.
The country’s forex reserves currently stand at US$1 billion, according to the RBM.
President Peter Mutharika called for the review of the Act to end the loss of forex due to externalization.
He noted the legislation was too old and had to be reviewed as a way of controlling illegal foreign exchange externalization.