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Debt overshadows IMF endorsement

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An independent economic expert has warned that despite the International Monetary Funding extending Malawi’s loan arrangement under the Extended Credit facility (ECF) to June 30, 2016, there is still need for government to come up with strategies to minimize debt levels.

The expert, who is former Executive Director of Economics Association of Malawi, Nelson Mkandawire, said even though Malawi continues to access various credit lines from its international partners, the money is not being used prudently resulting in a repayment burden on ordinary Malawians.

A latest Financial and Economic Review of the fourth quarter of 2015 released by the Reserve Bank of Malawi shows that Malawi’s external debt increased by 18.1 percent closing the quarter at K1,056 billion from K894 billion at the end of the third quarter.

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The report also indicates that public debt increased by 7.8 percent and closed the fourth quarter of 2015 at K525 billion representing 16.5 percent of Gross Domestic Product (GDP) as compared to K490 billion, which is 15.3 percent of GDP, in the third quarter.

And Mkandawire says the debt burden is becoming unbearable on the citizenry necessitating quick intervention from the leadership of the country.

“We continue imposing a burden on the future generation to settle the debts. It appears we are very excited with debts as a nation.

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Let us face the truth here, are we happy that we are a country being sustained by credit,” asked Mkandawire,” Mkandawire said.

He further said the country needs to find lasting solutions and formulate home grown solutions to its economic woes than continuing to rely on Bretton Wood such as IMF and the World Bank.

“Let us be a nation that will hate doing things on credit and we will applaud ourselves because we are graduating from the list of least developed countries to middle income,” said Mkandawire.

The IMF announced Monday that it has extended Malawi’s loan arrangement under the Extended Credit facility (ECF) to June 30, 2016.

The IMF said the extension is meant to give room to the Malawi Government to proceed with implementation of other structural measures under the programme.

The statement said the IMF board approved the extension without an Executive Board meeting.

“This extension will provide additional time for the authorities to implement structural measures under the programme,” reads part of the statement.

The ECF programme, which targets developing economies, is aimed at the achievement and maintenance of macroeconomic stability and implementation of policies and structural reforms to spur growth, diversify the economy and reduce poverty.

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