Economics Association of Malawi (Ecama) has said there is a need for some flexibility and support on the part of the International Monetary Fund (IMF) as Malawi takes steps to remain on track in the $175 million Extended Credit Facility (ECF) programme.
Ecama President Bertha Bangara Chikadza was commenting on concerns raised by United States Department of the Treasury Deputy Assistant Secretary Eric Meyer on slow progress taken by Malawian authorities to adhere to the key yardsticks of the ECF.
According to Meyer, low revenue collection, rising expenditures and the delayed implementation of the Integrated Financial Management and Information System (Ifmis) are critical factors that could hinder Malawi’s ability to meet the necessary commitments under the ECF.
But commenting on the concerns, Chikadza said it is important to recognise that these challenges reflect the inherent vulnerabilities of Malawi as a country.
- Advertisement -
“For instance, low revenue collection was there when the IMF told us to realign the exchange rate which worsened 2024
- Advertisement -
inflation and other issues in the economy. This also highlights a narrow tax base, which is not something that can be resolved instantly.
“Increasing expenditures may not always indicate a lack of fiscal discipline but rather the growing demands on the government to meet the critical needs of the Malawian people,” she said.
The Ecama chief observed that while it remains crucial for Malawi to strive to meet these quantitative benchmarks, doing so is not easy in a vulnerable economy like ours.
“Therefore, some degree of flexibility is needed from the IMF to accommodate these specific challenges while still maintaining the integrity of the programme.
- Advertisement -
“Malawi requires more support to successfully navigate these issues, and the solution should not involve the withdrawal of potential funding opportunities.
“Further, this is why there is a global call for a need to restructure the global financial architecture to bring a variety of cheap lending alternatives to countries such as ours,” Chikadza said.
Finance Minister Simplex Chithyola Banda on Friday said the Malawi Government remains optimistic that it would remain on track in implementation of the ECF programme.
Chithyola Banda said Malawi remains hopeful that it would be able to meet and implement all the conditions agreed upon by the IMF and Lilongwe.
According to Chithyola Banda, some of the conditions require Parliament’s interventions while others require change of approaches. He said Parliament will be meeting starting next week to look at some of the issues.
On Ifmis integration, the minister said most ministries, departments and agencies have integrated and that those remaining will be integrated very soon.
On ballooning expenditure, the minister said government has to meet social obligations like procurement of fuel, medical supplies and many others
“Some of the investments they are talking about are not liabilities, for they are potential investments that are helping this country generate forex through value addition and increased exports.
“Malawi remains optimistic about implementing the programme and we believe that in the next two weeks most of the conditions will be met,” Chithyola Banda said.
