Malawi begs Mozambique to lend it fuel after being depleted of forex

By Nyasa Times
Since August or so, the Malawi Government closed down all its forex exchanges in an effort to prevent indepent traders accessing hard currencies. It looked to me like an effort to prop up the value of the Malawi Kwacha as all neighbouring currencies were falling in line with the US Dollar. It also looked like tobacco sellers were failing to repatriate their dollars (tobacco priced in dollars). Were they waiting for a better rate?
Just before I left on Tuesday the TNM mobile phone people announced that the lack of forex was affecting expansion and for some time there was talk of fuel shortages. Earlier we were seriously delayed for metal roofing as a result of forex shortage. So the following news does not surprise me.
The Malawi Government has been pressing the Mozambique Government in a bid to borrow fuel as Malawi has run out of foreign exchange, it has been learnt.
Malawi is facing a serious fuel shortage following the scarcity of foreign exchange. Fernando Couto, Chief Executive Officer of the Northern Development Corridor (CDN), which runs the Nacala port and rail system, says that Malawi asked Mozambique to borrow fuel.
“The Malawians have even asked us to lend them fuel”, Couto revealed, denying claims by Malawi authorities that the current shortage of fuel is due to congestion at the Mozambican ports of Nacala and Beira.
Reserve Bank of Malawi (RBM) governor Perks Ligoya told a joint news conference with IMF in Lilongwe on Wednesday that, through government, there would be some adjustments in the local currency against other currencies to alleviate the forex problem.
“The movement of the exchange rate will be fixed with the flexibility within the band which would be put in place by the central bank like between MK135 to MK147 per US Dollar,” he said.
He therefore warned unscrupulous dealers of forex that they would be brought to book to face the law which attracts over three years in imprisonment with hard labour if found illegally dealing in forex.

Reasons for Malawi’s forex crunch – Bingu to blame
By Nyasa Times
Published: November 11, 2009
The problems that Malawi is facing ranging from fuel shortages, the forex crunch, power blackouts and water scarcity are attributable to the administration of Bingu wa Mutharika for his extravagant use of forex.
Nyasa Times has learned that Malawi’s forex problems have come about because the Government of Malawi, in June 2007 through the Reserve Bank of Malawi, lent the Zimbabwe Government about USD100 million.
The money was meant for the Zimbabwe Government to buy maize in Malawi, according to information on page 62 of the account for Reserve Bank of Malawi for the year ending 31 December, 2008.
The loan, guaranteed by the Malawi government on the basis of a personal understanding between President Mutharika and his close political pal President Robert Mugabe of Zimbabwe, is supposed to be repaid by the 31st. of December, 2009. It is yet to be seen whether the money will indeed be repaid.
In addition, media reports indicate that the Mutharika Government has bought a presidential jet for about US$15.9million, according to The Sunday Times, a newspaper owned and run by Blantyre Newspapers Limited of Finance Minister Ken Kandodo.
However, the Mutharika Government has not been fully forthcoming on the transaction involving the jet, bought from Aero Toy Store in the United States of America. Specifically, the government is being very secretive regarding the vote used to purchase the plane.
The Mutharika government also depleted forex following the blowing of £3million on a fleet of 22 Mercedes Benz cars from Britain for the cabinet. According to The Sun newspaper of Britain, London-based Crown Agents Bank Ltd. is said to have brokered the deal.
The Sun quotes a Malawian political source as saying: “If you guys in Britain think you’ve got it bad with your MPs’ noses in the trough, check out our lot. Thousands are starving but our government just wants to drive around in style.”
Moreover, Mutharika has been the subject of criticism on extravagant expenditure, drawing the ire of the opposition when his government purchases a fleet of top-of-the-range Hummer vehicles for his motorcade. In the same splurge, he also purchased buses to run his campaign, using one of them during the campaign in which bus he was the only passenger.
Said opposition Malawi Congress Party (MCP) President John Tembo, “Malawi cannot afford to buy such expensive and luxurious Hummers, coaches and buses and roll them on a presidential convoy without passengers.”
Fuel especially diesel and paraffin have been in short supply on the Malawi market for the past few weeks, a development that reached crisis levels last week.
Private owned Capital Radio reported that people in some parts of the southern region, as far away as Balaka, Zomba and Ntcheu districts have been trekking down to Blantyre to purchase diesel in bulk.
Motorists are reportedly continuing to abandon their cars at filling stations in hopes that they should remain in their position in line to purchase fuel once it is delivered at the stations.
To mislead the public, the Mutharika government has been blaming the shortage of fuel on congestion at Nacala and Beira ports in Mozambique, claims which have been rebutted by the Mozambique authorities as blatant lies.
The Mutharika Government has also been falsely blaming forex bureaux for the shortage of forex in Malawi, and traders for externalizing foreign exchange. However, all this has been simply in an attempt to divert attention from the real cause of the forex shortage: the government’s own extravagance, and its refusal to own up to this wastefulness.

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