Reserve Bank of Malawi (RBM) Governor Wilson Banda has attributed the K550.57 net loss the central bank reported last year to revaluation of its liabilities and assets.
This came out during the Financial Sector Lawyers Conference in Salima on Friday. It was held under the theme ‘Banking Law and Practice: Unpacking the Mystery of Central Bank Losses and Commercial Bank Profits.’
Banda has since asked Malawians to desist from analysing performance of the central bank from profit or loss-making perspective, reiterating that its core mandate is price and financial stability.
Banda said the balance sheet of the central bank is, by nature, a policy tool for achieving specific objectives and all activities of the central bank are aimed at achieving these objectives.
He said Malawi imports more goods and services than exports, which implies that it cannot finance its imports using the foreign exchange gotten from exports, which prompts the central bank to borrow in foreign currency from the International Monetary Fund (IMF) and other international lending institutions.
“Consequently, RBM has remained with huge foreign exchange liabilities than assets on its balance sheet, resulting into revaluation losses whenever the exchange rate depreciates.
“Of particular interest is the fact that between 2022 and 2023, RBM foreign exchange liabilities have not grown much, suggesting that the revaluation losses are largely coming from the country’s inability to accumulate foreign exchange reserves,” Banda said.
In 2023, RBM recorded a comprehensive loss of K557.57 billion and had foreign liabilities of K2 737.47 billion against foreign assets of K595.09 billion.
In 2022, the central bank recorded a comprehensive loss of K180.85 billion and had foreign liabilities of K1 736.83 billion against foreign assets.
0 Comments