The government has re-engaged the International Monitory Fund (IMF) over a new Extended Credit Facility (ECF) programme, about five months after cancelling the previous arrangement, the Treasury has said.
In a brief response to our question over possibility of resumption of the programme with the Bretton Woods’ institution, Treasury spokesperson Williams Banda said preliminary talks are bordering on debriefing IMF’s new Mission Chief to Malawi.
According to Banda, after completing her three years of duty to Malawi, Pirtha Mitra, along with most members of the Malawi mission team, has been replaced.
“We have started discussions with the IMF but currently our discussions are just briefing sessions to the new Mission Chief to Malawi,” Banda said.
IMF Resident Representative Farai Gwenhamo only said the two entities are working towards firming up time for the actual discussions on the facility.
In September last year, the government announced to have cancelled the ECF programme with the IMF, saying they were working towards negotiating a new pact.
This means the country forfeited $70 million under the three-year ECF programme with the fund.
However, cancellation of the arrangement did not affect funds already disbursed under the programme which was approved in April 2018.
In an interview on Friday, Economics Association of Malawi (Ecama) President Lauryn Nyasulu said hastening talks would be ideal for the country as it sends a tone to the country’s traditional development partners on possible budgetary support.
“The challenge with this is that hopes for getting budget support may be thwarted because budget support depends on successful programme performance,” she said.
Resources channelled through the programme also help the country cushion its Balance of Payment position.
After cancellation of the ECF arrangement, the IMF disbursed Covid emergency support to Malawi of about $193 million under the Rapid Credit Facility.
Upon channelling the resources, the fund said Malawi’s economic outlook has worsened since the first RCF as Covid infection cases have risen and the global and regional economic situation has deteriorated.
The additional financing intended to help fill part of the resulting increased external financing gap and provide the fiscal space needed to address critical spending needs.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.