IMF decides Malawi’s Extended Credit Facility Monday

Post was last updated: April 30, 2018

The International Monetary Fund (IMF) is Monday expected to decide on whether or not to give Malawi a new Extended Credit Facility (ECF) programme.

The IMF Mission Team— which came to Malawi in February this year and had discussions with Capital Hill— is today expected to present the Malawi case to the institution’s board in Washington DC.

Malawi’s last ECF programme valued at $156.2 million expired in 2017. The facility was approved in 2012 during the leadership of former president Joyce Banda—and was meant to cushion Lilongwe from economic shocks such as dry spells and floods.

Ahead of today’s meeting, both Capital Hill and IMF have indicated that the pillar for the next ECF programme— if approved—would be microeconomic stability so as to enhance growth of Malawi’s economy.

The programme, if approved, would focus on issues of interest and exchange rates, among others, for Malawi to register high levels of growth.

In an interview, Spokesperson for the Ministry of Finance, Davis Sado remained optimistic that Malawi has done all what was required to secure another deal with IMF.

“As Malawi Government, we have done our part to meet requirements for us to go into a new programme with IMF,” Sado said.

But some economists have warned Lilongwe against being complacent about clinching the new ECF deal considering the many financial scandals being reported at Capital Hill and in other government departments.

According to some economists and civil society analysts, the K4 billion-payout to selected legislators without Parliament’s approval during the 2018 Mid- Year-Budget Review could affect the IMF board decision.

Already, the World Bank has cast doubt on providing budgetary support to Lilongwe during the 2018/19 financial plan, which according to Secretary to the Treasury, Ben Botolo, would be pegged at less than K1 trillion, meaning downward move from the current K1.3 trillion.

Minister of Finance and Economic Planning, Goodall Gondwe, was recently quoted in the media expressing optimism that IMF would approve the new programme.

With the budget session starting on May 4, IMF has since advised Malawi to enhance transparency in the whole budget process as well as strengthen the medium term budgetary framework and cash management.

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