The Minister of Finance and Economic Affairs has emphasized that the Malawian economy must go through challenging and substantial reforms to meet the criteria for the Extended Credit Facility (ECF).
During a meeting on Monday with Nick Lea, Deputy Chief Economist at the United Kingdom’s Foreign Commonwealth and Development Office (FCDO), Chithyola-Banda reassured the UK that Malawi is committed to adhering to the terms of the International Monetary Fund (IMF) Staff-Level Agreement regarding the Second Review of the Staff Monitored Programme and the Extended Credit Facility arrangement.
Chithyola-Banda expressed that the country’s economic situation is at a critical juncture due to the unsustainable debt burden inherited by the government.
“We are running a crippled economy where the reserves are depleted and get assurance Lilongwe is committed to implementing reforms and keeping the programme on track. Government is stepping up efforts to meet fiscal targets under the PMB, adjusting expenditure to offset a shortfall in revenue and containing borrowing.
“Tough measures such as tightening monetary policy to contain inflationary pressures and foreign exchange auctions will have to be pursued. The rebuilding of foreign reserves has been slow as access to trade credit remains limited but government will negotiate with commercial and official bilateral creditors on commercial debts,” he said.
In his remarks Lea who was accompanied by British High Commissioner to Malawi Fiona Ritchie said the new minister has a huge responsibility to impact on the ailing economy.
“The economic outlook may not be good but a lot of countries have achieved high economic level because they had to sacrifice a lot. If Malawi economy is to thrive you have to put export at the centre of everything and all other problems will fall by the wayside,” he said.
He said with high exports Forex will be available to facilitate importation of fuel and other strategic products.
The IMF team reached a staff-level agreement on the Second (and last) Review of Malawi’s Staff Monitored Programme to be supported by an ECF arrangement with access arrangement of up to US$174million.
