The Reserve Bank of Bank of Malawi (RBM) resources grew by 19 percent to K599.8 billion (about $945.1million) during the third quarter of 2015 from K503.9 billion (about $794million) during the second quarter of 2015, a recent report has indicated.
The RBM’s Financial and Economic Report has attributed the expansion to unsectored liabilities which grew by K53 billion (about $84.9 million) due to open market operations.
The report said that official sector deposits also grew by K31.4 billion (about $49.4million) due to receipts of grants and project funds whereas external sector resources increased by K26.4 billion as a result of currency depreciation during the quarter.
According to the central bank, currency in circulation rose by K6.9 billion during the period under review, mainly reflecting price developments in the country.
RBM said it utilised its resources by investing K57 billion (about $90.4million) in the foreign sector and extended K47.5 billion (about $74.8million) as Ways and Means advances to government.
“The development in the external sector were characterised by purchases of foreign exchange from the market and receipts of project funds.
“The RBM used some of its funds to lend to government following shortfalls in its underlying fiscal operations and to redeem maturing securities,” said the report.
Similarly, commercial banks’ resources also grew by K87.5 billion to K904.5 billion during the third quarter of 2015.
According to the monetary authority, private sector deposits amounting to K73.3 billion accounted for 83.7 percent of the resources as they increased largely on the account of capital inflows for projects coupled with revaluation gains on foreign currency deposits following depreciation of the kwacha during the quarter.
Mid this year, RBM noted that despite a relatively healthy foreign reserves position in 2015 compared to last year, the kwacha depreciated sharply between July and August due to excess demand, speculative behaviour by market agents and an appreciating dollar.
However, the accumulation of term deposits for precautionary purposes also increased private sector deposits which was followed by capital accounts which rose by K8 billion as a result of an increase in commercial banks’ income during the period.
On the other hand, liabilities to non-residents also increased by K7.8 billion and official sector deposits went up by K6.5 billion but in contrast, un-sectored liabilities dropped by K8 billion on the back of reduced liabilities to the RBM.n