International Monetary Fund (IMF) First Deputy Managing Director Gita Gopinath has hailed President Lazarus Chakwera for the tough decisions he has taken to shore up the economy, raising hopes among Malawians that the country may soon get the much-needed Extended Credit Facility (ECF) programme.
The IMF second-in-command told The Daily Times at Kamuzu Palace in Lilongwe, where she engaged Chakwera Tuesday, that the fund is beginning to see progress and results from the decisions that Chakwera has made.
Currently, Malawi, which is under a Staff Monitored Programme with Executive Board involvement (PMB) that was approved in November 2022, is hoping to graduate to an upper credit tranche, the ECF, before the end of the year.
Speaking ahead of an IMF mission team that will be in the country next week to review Malawi’s performance under the PMB and assess the country’s readiness for the ECF, Gopinath said the reform momentum must continue and that this will form part of the discussions that the IMF team will hold with Malawi’s representatives next week.
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Gopinath said IMF staff and management are fully committed to supporting Malawi during the transformation phase.
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In a statement after the meeting, Gopinath hailed Chakwera, Finance Minister Sosten Gwengwe and Reserve Bank of Malawi (RBM) Governor Wilson Banda for the productive exchange of views and warm hospitality.
“We discussed the economic and developmental prospects for Malawi. I commended the authorities’ efforts under the Staff-Monitored PMB to restore macroeconomic stability, which will set the stage for stronger durable growth and poverty reduction. Macroeconomic adjustment and reforms are gaining traction and it would be important to maintain the momentum in the period ahead.
“We also discussed the policies that would be necessary to solidify the country’s hard-won gains. Securing a debt treatment would be vital for macroeconomic stability and ensuring that additional financing could be used to address Malawi’s pressing developmental challenges. Moreover, strengthening fiscal discipline and addressing weaknesses in governance remain essential,” she said.
During the engagement, Chakwera underscored the need for urgency on the part of the IMF to support the ailing economy.
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Briefing reporters, Gwengwe said Chakwera told the IMF deputy managing director that Malawi desperately needs an injection while it is alive, saying there is no use in coming up with interventions when the patient has died.
“So, the President was saying, ‘I hear all this and we are continuing with our reforms. We are steadfast to the necessary macroeconomic adjustments and reforms but be mindful of time because we are a patient that is on a sickbed’.
“Malawi needs the injection while the country is still alive. So, for him, it is the commitment to continue with the tough fiscal reforms. As you have been hearing about the Ifmis [Integrated Financial Management System] and stuff, the macro reforms, the governance reforms— all the reforms that Malawi has been implementing over the past two, three years— are being recognised,” Gwengwe said.
Two weeks ago, RBM Governor Banda told reporters in Lilongwe that Malawi desperately needs an ECF programme with the fund, which would help send a signal to the donor community and private sector investors that the country is steering the economy in the right direction.
Banda said the ECF would likely unlock hundreds of millions of dollars in donor support, a development that would help ease financial challenges the country is facing.
