The Reserve Bank of Malawi (RBM) has said Malawi is on track with the Extended Credit Facility (ECF) programme of the International Monetary Fund (IMF).
The IMF approved the ECF for Malawi on November 15 2023 after the country had stayed for some years without the facility.
According to RBM Director of Economic Policy Research Kisukyabo Simwaka, RBM will ensure that Malawi continues to benefit from grants and project funding.
He said this will go a long way in improving the country’s foreign exchange position, over and above what is being released from the on-going tobacco sales.
“In this sense, let me also clear the fake news that has been awash in the social media about an impending devaluation. These are baseless, unfounded and therefore grossly misleading.
“As a country, we are on track and we are doing all the necessary needs to have ECF up and running. Considering that accurate information is key for decision making, at RBM we remain committed to making vital information available through our various publications, online and engagements,” Simwaka said.
Economist Marvin Banda said people need to remember that the ECF is a 48-month arrangement in an amount equivalent to SDR131.86 million (about $175 million), which saw Malawi recover an immediate disbursement of SDR26.37 million (about $35 million) in November.
He said seven months into the programme Malawi cannot expect a miraculous turnaround; as an appearance of such would be fraudulent considering the depths of economic turmoil the nation and its people have endured over the past decade.
“The ECF comes with considerable measures that are benevolently designed to improve Malawi’s economic position gradually.
“The main points in the arrangement are; Malawi’s external debt, which is unsustainable and debt service needs will continue to erode the already limited fiscal space leading to either trade-offs in expenditure or more borrowing,” Banda said.
He said rumours of devaluation may be officially unfounded but they exist because of the misalignment between official and unofficial prices of foreign currency that continue to experience pressure which the 44 percent devaluation aimed to address.
In May the country had an IMF staff visit to review the ECF.
The ECF arrangement aims to support the authorities’ commitment to restore macroeconomic stability, build a foundation for inclusive and sustainable growth, including strengthening resilience to climate-related shocks, and addressing weaknesses in governance and institutions.
