IMF team in for Extended Credit Facility review

post was last updated: March 13, 2019

By William Kumwembe:

The International Monetary Fund (IMF) mission is in the country for a second review under the three-year Extended Credit Facility (ECF) support programme with Malawi.

IMF resident representative, Jack Ree, said the team would be in the country until Friday, March 15 2019, engaging a broad set of stakeholders.

Traditionally, the mission discusses, with various government authorities, the progress made and future plans that have been put in place regarding the public finance management in line with the ECF programme recommendations.

The two parties would further discuss how the government is implementing the 2018/19 National Budget against targets in the three-year $15.4 million (about K11.3 billion) programme.

The IMF mission, led by mission chief for Malawi Pritha Mitra, which was in the country for the first review in October 2018, said the country can do better if fiscal authorities maintain a sound macroeconomic environment.

During the previous meeting, the government was told that it could also do better in improving debt and public financial management and restoring budget balance to correct the previous year’s spending overruns, among other suggestions.

In November 2018, Malawi passed the IMF test as the fund’s executive board approved disbursement of $15.4 million under the programme.

The approved amount is part of the $108.2 million to be disbursed over a three-year period.

The three-year arrangement was approved in April 2018 to support the country’s economic and financial reforms.

The IMF Executive Board also approved a request for waivers for the nonobservance of the quantitative performances on the primary fiscal balance and on new non-concessional external debt.

It also approved a request for modification of the end-December 2018 performance criteria on reserve money, net international reserves of the central bank and the primary fiscal balance.

IMF Deputy Managing Director and acting Chair, Tao Zhang said “Malawi’s programme performance has been satisfactory.”

“Programme-supported structural reforms advanced and most performance criteria were met, with significant overperformance in international reserves and reduction in the Reserve Bank of Malawi (RBM) holdings of government securities,” Zhang said.

The ECF-supported programme is aimed at entrenching macroeconomic stability and fostering higher, more inclusive and resilient growth.

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