Banks in the country have dragged government to court over new regulations new Exchange Control Regulations (ECR), aimed at controlling the use of foreign currency.
According to Malawi News, the Bankers Association of Malawi (Bam) through lawyer Kalekeni Kaphale is challenging several aspects of the ECR.
The ECR was gazetted on December 16, 2024.
“The association is seeking “a judicial review of several aspects of the regulations in question,” Kaphale said
While acknowledging the case, Ministry of Justice spokesperson Frank Namangale told the paper that the Attorney General’s office is contesting the matter.
The Ministry of Finance and Economic Affairs published the new foreign exchange controls to strengthen the country’s dwindling foreign exchange reserves.
The Government Gazette addressed to public institutions, including research institutions and public universities implementing donor-funded projects.
Among others, the institutions will be required to open foreign currency- denominated accounts at the Reserve Bank of Malawi (RBM).
The institutions will also be required to convert 80 percent of their foreign currency receipts into kwacha while non-governmental organisations are expected to convert 70 percent of their forex receipts into the local currency.
Reads in part the notice signed by Minister of Finance and Economic Affairs Simplex Chithyola-Banda: “The bank shall, upon receipt of a credit as funding in a foreign currency-denominated account, apply a mandatory conversion or retention ratio of 80 percent of the total funding at the official buying exchange rate published by the bank while retaining the remaining 20 percent in the foreign currency-denominated account.”
He said anyone who contravenes these regulations will face a fine of “not exceeding K200 million or an amount equivalent to the financial gain generated by the commission of the offence, whichever is greater and imprisonment for up to five years”.
