BLANTYRE (Reuters) – Malawi will hike fuel and electricity prices effective Friday after the central bank devalued the local currency by about 30%, the country’s energy regulatory authority said late on Thursday.
The Reserve Bank of Malawi devalued the kwacha currency’s exchange rate to the dollar earlier this week in a bid to prop up dwindling foreign currency reserves.
The price for petrol would increase to 2,530 kwacha ($1.52) per litre from 1,746 kwacha per litre, while the diesel price has been increased to 2,734 kwacha per litre from 1,920 kwacha per litre, the Malawi Energy Regulatory Authority said in a statement.
Citing the impact of the devaluation and high inflation, the regulator said it was also applying an over 40% tariff increase on electricity.
In a notice to banks on its move to devalue the currency, the central bank said it was needed due to prevailing supply-demand imbalances in the currency market.
The landlocked southern African country is one of the poorest in the world and has been battling severe medicine, fertilizer and fuel shortages due to limited foreign currency supply, resulting in long queues of motorists at fuel stations.
The International Monetary Fund (IMF) said in September that it had reached an agreement with Malawi for a new loan of about $174 million to help the country recover from a series of shocks, including a devastating cyclone in March.
The IMF board is set to consider the loan in mid-November. The IMF’s sign-off on it is contingent on Malawi’s external creditors committing to restructuring its debts.
($1 = 1,666.7300 kwacha)
(Reporting by Frank Phiri, Writing by Bhargav Acharya, Editing by Christina Fincher)