Malawi’s President, Lazarus Chakwera, has expressed optimism about securing an Extended Credit Facility (ECF) program with the International Monetary Fund (IMF) this year. President Chakwera on Saturday met with an IMF mission that was in the country to conduct the first review of Malawi’s candidacy for the ECF. The IMF team informed President Chakwera that the second and final review would take place in June before presenting the results to the IMF Board for consideration.
The IMF team highlighted that the upcoming review would assess the progress made by Malawi in restructuring the inherited debt from the previous administration to ensure its sustainability. The IMF advised the government to engage with lenders, particularly Afreximbank and the Chinese Government, regarding the repayment plan. President Chakwera pledged to personally engage with Afreximbank during its annual meeting in Ghana in June and to discuss the debt issue with the Chinese Government, as he has been invited to be a guest of honor at the China Africa Expo.
The IMF mission, led by Mika Saito, is expected to issue a formal statement regarding its activities in Malawi. The mission’s purpose was to discuss the First Review of Malawi’s Staff Monitored Programme, which was approved by the IMF Executive Board in November 2022. The assessment of Malawi’s performance would be based on end-December 2022 program targets. The mission held discussions with government authorities, civil society actors, and development partners.
Malawi faces a $850 million debt with Afreximbank and the Trade and Development Bank (TDB), which was contracted by the Reserve Bank of Malawi and the Treasury between 2017 and 2019 under the previous Democratic Progressive Party administration. The debt, primarily through currency swaps, matured in 2020. The IMF has raised concerns about the debt’s impact on Malawi’s short to medium-term debt sustainability. Malawi is seeking a solution to address these debts as it aims to transition from the Rapid Credit Facility program to the ECF program by mid-year.