The Reserve Bank of Malawi (RBM) has made a rare and troubling admission that the country is struggling to manage foreign exchange allocations for critical sectors such as fuel and medicines due to severely depleted forex reserves.
Speaking during the Monetary Policy Technical Committee Forum in Mzuzu on Monday, RBM principal economist Whytone Jombo painted a grim picture of an economy trapped in a deepening forex crisis, where authorities are being forced to juggle limited dollars against overwhelming national demands.
"I can assure you that when forex is not enough, it is really difficult to manage because you have to address competing needs such as pharmaceuticals and fuel," said Jombo.
"It is tough to allocate and ensure that all sectors get enough."
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The remarks amount to one of the clearest acknowledgements yet that Malawi's foreign exchange shortages have reached alarming levels, raising fears over the country's ability to sustain imports of essential commodities.
Malawi's recommended forex reserve benchmark is at least three months of import cover -- estimated at around $750 million (about K1.3 trillion). But available figures indicate the country remains far below that threshold.
The situation is so severe that the government recently sold gold stocks through RBM to raise money for fuel imports.
Last month, Minister of Information and Communications Technology Shadric Namalomba confirmed that government used proceeds from gold sales to pay $30 million (about K52 billion) to fuel suppliers in a desperate attempt to avoid a worsening fuel crisis.
Although RBM insists the gold sold was not part of the country's strategic monetary reserves, the development has intensified concerns about the extent of Malawi's forex desperation.
Jombo defended the move, saying the gold was purchased from local artisanal miners through RBM subsidiary Export Development Fund (EDF) specifically for resale.
"We bought the gold so that we could sell it. We did not sell it because we were desperate," he said.
But critics argue that a country selling gold to buy fuel exposes the depth of the economic pressure facing Malawi.
The forex crisis persists despite the tobacco marketing season -- traditionally Malawi's biggest forex earner -- already generating about $26.1 million (K45.7 billion) within the first three weeks.
However, economists say the inflows remain too small against the country's massive import needs and growing demand for dollars on the market.
The RBM Monetary Policy Committee (MPC) report for May 2026 admitted that forex supply remains "subdued relative to demand," a sign that shortages are likely to continue.
During the forum, frustration over the handling of the economy became increasingly visible.
Kwithu Kitchen finance adviser Pyoka Mfune openly questioned RBM's independence and challenged the central bank to liberalise the exchange rate, arguing that political interference is worsening the forex crisis.
"What is so difficult with releasing the exchange rate?" Mfune asked.
"If we are to release the kwacha, a lot of forex would come into the country. Let us remove politics from RBM and our economy."
His remarks reflect growing pressure from economists and business players who believe Malawi's controlled exchange rate system is choking forex inflows and encouraging parallel market trading.
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Meanwhile, RBM continues tightening monetary policy in an attempt to contain inflation and stabilise the economy.
Last week, the central bank maintained the policy rate at 24 percent and increased the liquidity reserve requirement for banks from 10 percent to 12 percent to absorb excess money circulating in the economy.
RBM Governor George Partridge said although inflation has slightly slowed, rising non-food prices, excess liquidity and money supply growth remain major threats to macroeconomic stability.
But despite slight reductions in commercial bank lending rates following recent policy adjustments, analysts argue borrowing costs remain too high to meaningfully stimulate investment, business growth and production.
As pressure mounts on fuel imports, medicine supplies and the cost of living, RBM's latest admission is likely to deepen public concern over the true state of Malawi's economy.
