The International Monetary Fund (IMF) has rated positively Malawi’s reforms under Extended Credit Facility (ECF) programme.
The IMF Staff team concluded its mission to Malawi Friday.
The mission had been in the country since Monday to take stock of recent macroeconomic developments and the implementation of adjustments and reforms supported by the ECF.
IMF Mission Chief Mika Saito said in a statement that Malawi’s economic position remains challenging, but stabilization efforts continue to get traction.
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According to Saito, real GDP growth is projected to increase to 3.3 percent in 2024 from an estimated 1.6 percent last year.
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“We also discussed the authorities’ progress in implementing macroeconomic adjustment and reforms under the ECF-supported program. These efforts will be formally assessed in the context of the first review of the ECF arrangement, which is expected to take place in the summer.
“We underscored the importance of staying the course with the program to restore macroeconomic stability, a necessary condition to build a foundation for inclusive and sustainable growth and resilience to climate-related shocks,” Saito said.
In an interview, Chithyola Banda said the IMF’s forecast that Malawi’s economy will grow with 3.3 percent this year is a clear signal that the journey to economic recovery is real.
“This is the first test that we have passed and we look forward to future reviews and we believe that under the leadership of President Lazarus Chakwera we are going to achieve this economic growth and that people’s lives will be better,” Chithyola Banda said.
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He said government wants to diversify economic activities in order to increase the country’s earnings to bridge the funding gap and budget deficits.
He expressed confidence that with the recovery plan that government has put in place, realising the economic growth is very certain.
“For me, this has been very insightful because within a shortest period of time we have been able to meet targets of some indicative economic indicators.
“This gives hope to Malawians that slowly but surely our journey towards economic recovery is bearing fruits,” he said.
The latest World Economic Outlook report has indicated that Malawi has managed to reduce the gap between parallel and official policy rate to five percent.
“In some few months to come Malawians will see and experience positive strides. All these are because Malawi has a leadership that provides the rightful leadership,” Chithyola Banda said.
Malawi secured a new four-year $175 million ECF Programme with the IMF on November 15 last year following years of negotiations.
The ECF arrangement aims to support Malawi’s commitment to restore macroeconomic stability, build a foundation for inclusive and sustainable growth, including to strengthen resilience to climate-related shocks, and address weaknesses in governance and institutions.
The ECF is also expected to catalyse grant financing and capital inflows including foreign direct investment and trade credit.
