Malawi is facing a severe foreign exchange crisis, with reserves falling to $600.6 million, equivalent to 2.4 months of import cover, as of July 2026. This is below the internationally recommended minimum of three months. The Reserve Bank of Malawi (RBM) has responded by tightening controls on the possession and movement of foreign currency. The new measures, announced by RBM Governor George Partridge, aim to manage the limited foreign exchange available.
The RBM has introduced three notices that restrict the amount of foreign currency individuals can physically possess or take out of the country without permission. The Foreign Exchange (Limit on Physical Possession of Foreign Currency) Notice of 2026 states that no individual may physically possess foreign currency exceeding $1,000 or its equivalent in another currency without permission from the central bank. This move aims to regulate the informal market and ensure that foreign exchange is used efficiently.
The new regulations also limit the amount of local currency that travellers and cross-border traders can take or send abroad. Cross-border traders are now restricted to taking or sending the equivalent of $5,000 outside the country without RBM permission, while other travellers are limited to $100. Anyone taking or sending more than $1,000 in foreign currency outside Malawi must provide evidence that the money was sourced from an authorised dealer or obtain permission from RBM.
Economic experts have weighed in on the new controls, with University of Malawi economics lecturer Edward Leman saying that while they may help manage the symptoms of the forex shortage, they will not increase the country's reserves on their own. Leman argues that sustainable improvement requires policies that increase export earnings, attract foreign capital and investment, strengthen formal remittance channels, and restore confidence in the formal foreign-exchange market.
Economic analyst Milward Tobias described the measures as a crisis-management intervention that should be temporary while authorities work to increase forex inflows. He likened the restrictions to rationing resources in a household facing scarcity, saying Malawi should use the period to tackle the underlying causes of the forex shortage. Tobias highlighted exports, foreign direct investment, remittances, and development-partner support as key channels through which Malawi needs to increase foreign exchange inflows.
The forex shortage is already affecting cross-border traders, with Cross-Border Traders Association of Malawi chairperson Steven Yohane saying that some traders are sourcing forex outside formal channels due to the shortage. The RBM's July 2026 Monthly Economic Review shows that total reserves declined from $616.1 million in June to $600.6 million in July, equivalent to 2.4 months of imports.
The RBM's efforts to manage the forex shortage come as the country faces a double challenge of forex scarcity and growing informalisation of the limited foreign exchange available. While the new controls may help manage the symptoms, experts agree that a more sustainable solution requires addressing the underlying structural economic problems. The RBM had not responded to requests for comment on the new measures at the time of writing.
Key points
- The Reserve Bank of Malawi has imposed stricter controls on foreign currency possession and movement to manage the country's severe foreign exchange crisis.
- The new measures restrict individuals from physically possessing foreign currency exceeding $1,000 without permission and limit the amount of local currency that can be taken or sent abroad.
- Economic experts say the controls may help manage the symptoms of the forex shortage but will not increase the country's reserves on their own, and that sustainable improvement requires addressing underlying structural economic problems.
