Lilongwe – Malawi has introduced new rules requiring foreign tourists to pay for hotel accommodation and related services in hard currency as the country moves to protect its weakening foreign reserves. The directive was announced in Lilongwe by Finance Minister Joseph Mwanamvekha during a mid-year budget review, which outlined why thegovernment believes tighter controls on foreign exchange are needed to stabilise the economy.
The ministry said the country has faced increased pressure on reserves following the termination of the International Monetary Fund’s Extended Credit Facility earlier this year along with reduced budget support from several development partners. Government now wants all hospitality establishments that serve foreign visitors to bill them in United States dollars, euros or any other widely accepted foreign currency.
Tourism operators will be required to apply for special licences permitting them to transact directly with the Reserve Bank of Malawi. Mwanamvekha told parliament that the measures are intended to prevent leakages in the system and ensure that every unit of foreign currency entering the country is properly accounted for.
The government rolled out additional steps affecting exporters. Companies that trade goods abroad will now have ninety days to repatriate earnings instead of the previous one hundred and twenty day window. Any remaining foreign currency after import payments will have to be surrendered to authorities.
Short term foreign exchange derivatives have also been suspended. Officials said the decision follows concerns that some market players were using the instruments in ways that put further strain on the country’s financial position. The instruments may only resume once a new regulatory framework is in place.
Malawi has further revoked visa free entry for seventy nine countries. Visitors from those nations will now pay visa fees on arrival. Critics in the tourism industry have warned that the changes could dampen arrivals at a time when the sector is viewed as one of the country’s most promising avenues for economic expansion. Government maintains the reforms are necessary to restore financial stability.
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