Government hopes for ECF as IMF review meetings resume

Sosten Gwengwe

By Justin Mkweu & Chimwemwe Mangazi:

Local authorities continue to plead for an Extended Credit Facility (ECF) from the International Monetary Fund (IMF) as revelations indicate review meetings on economic developments between Lilongwe and the Breton Woods institution resumes on February 6 2023.

Both Minister of Finance and Economic Affairs Sosten Gwengwe and IMF Resident Representative Farayi Gwenhamo confirmed the scheduled meetings.


In an interview Monday, Gwengwe indicated that the discussions are expected to resume through virtual meetings scheduled from Monday through to Friday next week.

However, he was quick to say the possibility of having a programme for Malawi is a long process and that they are also engaging creditors on their debt sustainability plans.

Nevertheless, he emphasised that an ECF programme is crucial to the Malawi economy.


“ECF will unlock substantial budget support because Malawi concluded the Development Policy Operations with the World Bank, which is now contingent only on ECF,” Gwengwe said.

In a separate interview, Gwenhamo, while confirming reports about the virtual meeting, indicated that direct ECF discussions are not on the agenda.

She said the IMF staff will take stock of the latest developments on the macroeconomic front, including the budget formulation process.

“The budget formulation process will be discussed in the context of Malawi’s 12-month staff monitored programme which started in November last year.

“The staff monitored programme will enable the authorities to build a track record towards an IMF supported upper credit tranche (UCT) programme such as the ECF,” Gwenhamo said.

In November last year, the government outlined new strategies for resuscitating the economy as outlined in an IMF board statement approving the disbursement of $88.3 million under the Rapid Credit Facility.

Some of the strategies were fiscal discipline, supported by a realistic budget, an enhanced Public Financial Management system and timely production of comprehensive fiscal reports.

The government also committed towards restoring price stability and ensuring, financial sector stability which the fund said will help build a foundation for private sector-led growth.

“Rebuilding external buffers will be critically important to reduce Malawi’s vulnerabilities to external shocks. The RBM’s commitment to rebuild its foreign exchange reserves, requiring implementation of its strategy to wind down unsustainable policies including excessive use of swaps and trade credit to maintain strategic imports and other quasi-fiscal operations, are welcome,” the statement reads.

The local economy continues to be volatile with ever rising inflation, a weak exchange rate regime and depleted foreign exchange reserves.

A new ECF programme could help the government address balance of payment issues hinging on the performance of the economy.

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