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Experts tip Treasury on ECF programme

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Ben Kalua

Economists have asked the government to lobby for investment and development-related assistance from the International Monetary Fund (IMF) as it negotiates the new Extended Credit Facility (ECF) programme.

The experts say, apart from the traditional Balance of Payment (BoP) position support, agreements under the new programme should propel the country towards economic recovery and sustainable development.

Earlier this week, the Treasury hinted that talks were underway on a new ECF programme with the Britton Woods’ institution after Malawi canceled it in September last year, forfeiting $70 million [about K53 billion at that time’s exchange rate].

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In an interview on Tuesday, UK-based Malawian economist Sane Zuka said Malawi needed ECF dictates to help in addressing key bottlenecks in the energy, manufacturing and service sectors.

“I hope that the government is making steps to negotiate a better deal with the IMF. While reducing the debt burden, the ECF is desirable for a country that is already in huge debt like Malawi. It is important that future ECF programme should principally focus on capacity building and generation of wealth rather than consumption,” Zuka said.

In a separate interview Economics Association of Malawi President Lauryn Nyasulu said Malawi should focus on building its export base with a diversified portfolio to sustainably increase its export proceeds and address the perpetually volatile BoP position.

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“It is possible for Malawi to operate without the ECF but not now. Foreign exchange gaps that arose from a decline in export proceeds due to Covid have largely been financed by multilateral organisations such as IMF. The ECF is much needed in these times,” Nyasulu said.

Chancellor College-based Professor of Economics Ben Kalua, however, said the country should devise ways of phasing out ECF support and tilt towards sustainable economic development projects.

“We are under fire. We have to balance our account. The problem is in production. We are highly an imports-dependent nation even for production. We should be dependent on imports on high value products to pay for whatever we import,” Kalua said.

In an interview on Tuesday, Treasury spokesperson Williams Band said the new ECF programme would be in line with the 2021/22 Budget

However, it remains unclear if discussions for the new ECF programme would be concluded prior to passing of the 2021/22 national budget, which Finance Minister Felix Mlusu is expected to table in Parliament.

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