IMF optimistic on new programme with Malawi

TWO weeks after the International Monetary Fund ( IMF) approved the disbursement of the ninth and final tranche under its Extended Credit Facility (ECF) programme with Malawi, the bank says chances are high for Malawi authorities to negotiate a new programme.

Earlier, Finance Minister, Goodall Gondwe, said government was considering making a fresh application for the same facility in the near future. Then, IMF Resident Representative to Malawi, Jack Ree, had indicated that Malawi may not need an extension.

The ECF programme— which was valued at $146.7 million—aimed at achieving and maintaining macroeconomic stability and implementation of policies and structural reforms to spur growth, diversify the economy and reduce poverty.

In a written response to a questionnaire, Ree said the IMF is impressed with how government has managed to stabilise the economy and inflation levels since the start of the ECF programme in 2012.

“ The ECF was successfully concluded in June. Given the high interests shown by Malawi authorities, and the successful completion of the current programme, there is a good chance to see negotiations for another programme,” he said.

He also hailed the policy rate cut by the Reserve Bank of Malawi (RBM), saying it is consistently focused towards a decisive victory over inflation before the policy gear is shifted to regrowing the economy in an inclusive manner.

“And I think that the market feels fairly confident with the authorities commitments as seen by the recent movement of kwacha which has been super stable,” he said.

Ree, however, advised authorities to ensure that the fixed pipes for public f i n a n c e management do not break again and move reforms to more sophisticated sources of leaks, such as procurement.

IMF further said Malawi was able to achieve about s even per c e n t growth between 2004 and 2011, adding that the growth decelerated to 3.6 percent between 2012 and 2016 when inflation averaged 23.4 percent.