Advertisement
National

Government cautioned on IMF demand

Advertisement

University of Malawi (Unima) professor of economics Ben Kalua has cautioned government against dithering on fulfilling requirements by the International Monetary Fund (IMF) under the Extended Credit Facility (ECF) programme.

The caution comes after IMF’s last week announcement that it has extended Malawi’s arrangement under ECF to 30 June following government’s request that it should conclude some requirements under the programme.

In the announcement IMF said its Executive Board approved on May 16, without an Executive Board meeting, the extension of Malawi’s arrangement under ECF “to provide additional time for the authorities to implement structural measures under the programme”.

Advertisement

According to the Ministry of Finance, Economic Planning and Development, some of the structural measures include bank statements as evidence for reconciliations which was one element which IMF was worried about.

The institution’s mission—led by Oral Williams—which was in the country from 9 to 23 March this year to conduct discussions on the seventh and eighth reviews under the ECF arrangement, declared at the end of the visit that the ECF programme was back on track.

Following the on-track declaration, the IMF board was supposed to meet at the end of this month to authorise the disbursement of 20 million Special Drawing Rights (SDR)—which is about $30 million—to boost forex reserves of the Reserve Bank of Malawi (RBM).

Advertisement

Ministry of Finance spokesperson Nations Msowoya said in an earlier interview that government had requested for more time before the IMF board can make the final decision on the next SDR disbursement.

“The declaration that we are back on track was general. We requested for some more time so that we can provide documents like bank statements as evidence for the structural reforms and the permission has been granted,” said Msowoya.

Without government providing concrete evidence for the structural measures under the ECF programme, the IMF Executive Board can put on hold the next disbursement.

And this is a concern to Kalua who has argued that forex problems may get worse if Malawi does not access the next SDR disbursement from the IMF as soon as possible.

In an interview on Saturday, Kalua challenged government to show its commitment in economic management by making sure all proper measures are concretised even without the demand from IMF.

“For instance, audits are supposed to be conducted periodically in any economic environment and that does not need the IMF to tell us to do. Now with the extension of the period by IMF, it simply means the disbursement will be put on hold until the requirements are met.

“Any delay in accessing these kinds of resources [the Special Drawing Rights] will cost us dearly because we are talking about forex reserves that will continue dwindling as we remain an importing nation. The economy will suffer as the value of the dollar will continue rising,” said Kalua.

The ECF arrangement for Malawi was approved on July 23, 2012 in an amount equivalent to SDR 104.1 (about $146.7 million).

The programme is aimed at providing assistance to countries with protracted balance of payment s problems.

The programme was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the institution’s financial support more flexible and better tailored to the diverse needs of low-income countries like Malawi.

Advertisement
Show More
Advertisement

Related Articles

Back to top button
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker