Sunday, May 26, 2024

Malawi passes IMF first test for extended credit facility


Malawi has successfully completed the second and final phase of evaluation by the International Monetary Fund (IMF), leading to the establishment of a staff-level agreement concerning the review of the Staff Monitored Programme with Executive Board Involvement (PMB).

As a result of this achievement, Malawi is set to receive $174 million (equivalent to approximately K195 billion) through a new 48-month financing arrangement under the Extended Credit Facility (ECF).

An announcement from the IMF, released today, clarifies that the agreement is contingent upon the approval of IMF management and the executive board, which is scheduled for mid-November this year, and the fulfillment of the necessary financing commitments.

Mika Saito, the IMF mission Chief who led discussions with Malawian authorities from August 29 to September 30, is cited in the statement as expressing the expectation that this arrangement will stimulate grant financing and bolster ongoing endeavors to reestablish a stable and sustainable macroeconomic position.

She said: “The prospective ECF-supported programme will aim at restoring macroeconomic stability, building a foundation for inclusive and sustainable growth, addressing weaknesses in governance and institutions and strengthening resilience to climate-related shocks.

“Fiscal policy will aim at achieving a debt-stabilising primary balance in the medium-term through a package of expenditure adjustment and revenue mobilization measures. The authorities are committed to applying fiscal discipline, containing domestic borrowing, and improving public financial management.”

The IMF delegation held discussions with President Lazarus Chakwera, Minister of Finance and Economic Affairs Sosten Gwengwe, Reserve Bank of Malawi Governor Wilson T. Banda, and various high-ranking government representatives.

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