FX shortage crimps Malawi ministers' foreign trips

LILONGWE (Reuters) - Malawian President Bingu wa Mutharika has told senior civil servants and ministers to cut back on overseas travel due to a severe shortage of foreign exchange in the southern African nation.

The central bank attributes the lack of foreign currency to low earnings this year from tobacco, which accounts for 60 percent of exports, and a hangover from huge fuel and fertilizer import bills last year.

"The directive is with immediate effect. No minister or their deputies will be allowed to travel abroad more than six times a year," presidential secretary Bright Msaka told Reuters on Thursday. Single trips must not exceed 14 days, he added.

According to the central bank, Malawi has 2.4 months of import cover -- less than the three months recommended by the International Monetary Fund (IMF).

The IMF mission in Malawi has been urging the government to channel public resources to priority areas to balance the demand and supply of foreign exchange.

The country is spending $129 million each month to cover the cost of imports, according to Reserve Bank of Malawi governor Perks Ligoya.

Last week, the bank trimmed its 2009 growth forecast to 7.7 percent, mainly due to a 9 percent decline in tobacco revenues compared to 2008. Even at that rate, the agriculture-driven economy remains one of the world's fastest-growing.