Malawi makes tourists pay for hotel rooms in hard currency

Malawi has ordered foreign tourists to pay for hotel stays in dollars, euros and other hard currencies as it tries to top up dwindling foreign reserves, Finance Minister Joseph Mwanamvekha said on Friday.

In a mid-year budget review, Mwanamvekha said foreign reserves had come under pressure since the International Monetary Fund's Extended Credit Facility was terminated earlier this year. Some donors also cut back budget support.

Under the new initiative, tourism businesses were told to apply for special licences to let them handle foreign exchange directly with the central bank.

The steps will help save every dollar and close loopholes, Mwanamvekha said.

Exporters will also get less time to bring their earnings home – 90 days instead of 120 – and will have to handover part of any leftover foreign currency to authorities after paying for their imports.

The government is also banning short-term foreign-exchange derivatives, complex contracts banks use to bet on or protect against moves in the kwacha, saying some players have abused them. It will only allow such products again once tighter rules are in place.