The International Monetary Fund (IMF) mission to Malawi has said it had very productive discussions with Malawi authorities.
Briefing reporters in Lilongwe at the end of the mission, IMF mission chief for Malawi Justin Tyson said they discussed the recent economic, financial and social developments.
Tyson admitted that the macroeconomic challenges for the new government are significant.
He said the challenges include a worse than budgeted fiscal outturn of the mid-year, accelerated inflation and continued pressures on the exchange rate.
- Advertisement -
According to Tyson, growth is projected to be modest in 2025 at 2.4 percent and food insecurity is elevated.
- Advertisement -
He added that public debt dynamics remain unsustainable.
“Our discussion focused on near term policy priorities and staff agreed with the authorities that urgent fiscal consolidation and tighter monetary policy are needed to tackle inflation, reduce imbalances and stabilize the foreign exchange market.
“Staff commended the authorities for reactivating the automatic fuel price mechanism and encouraged them to operationalise the promised fiscal discipline and revenue mobilisation starting with the midyear budget,” he said.
According to Tyson, recent measures to control expenditure are a positive sign and the IMF looks forward to continued engagement with the authorities on their macroeconomic reform trajectory.
- Advertisement -
In his remarks, Finance Minister Joseph Mwanamvekha said the IMF was scoping for them to understand the economic situation at the moment.
According to Mwanamvekha, what is more important is that the IMF is willing to help Malawi out of the current economic predicament.
He said going forward the IMF and authorities will have to agree on whether Malawi will proceed on an Extended Credit Facility programme or a staff monitored programme.
According to Mwanamvekha, IMF Director of Africa Department Abebe Aemro Selassie will also come to Malawi in the coming weeks to have discussions with President Peter Mutharika on how best they can help Malawi to tackle the economic challenges.
