WORLD BANK WARNES MALAWI'S G2G

The World Bank has warned that Malawi's new government-to-government (G-2-G) fuel procurement arrangement may not be the best solution to the country's fuel shortages. This approach, where the government buys fuel directly from another country, can lead to fixed prices that are significantly higher than global prices.World Bank


Malawi's government has already started implementing this arrangement, with the state-owned National Oil Company of Malawi (Nocma) as the sole importer. However, the World Bank notes that this could put pressure on the Reserve Bank of Malawi to provide foreign exchange from its limited reserves.


The bank also points out that Malawi's legislation exempts these transactions from oversight mechanisms, which could lead to problems. While the new arrangement may provide temporary relief from fuel shortages, it doesn't address the underlying issues of price distortions and foreign-exchange constraints.


In fact, the World Bank says that Malawi's fuel shortages are partly due to the government setting fuel prices too low, resulting in massive losses for petroleum importers. The country spends around $600 million on fuel imports each year, and needs $3 billion to meet its import requirements.


 

    Petroda fueling station 

                     By Stuart chinthuli 

 

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