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IMF says RCF tracking slow

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Farayi Gwenhamo

The International Monetary Fund (IMF) has said the government has been relatively slow in fulfilling commitments made under its Rapid Credit Facility (RCF).

Last year, the IMF disbursed about $192 million for emergency Covid support, out of which $91 million was disbursed in May 2020 while $101 million was released in October 2020.

The first disbursement was entirely Balance of Payment (BoP) support while 70 percent of the second trench was for boosting BOP position with the remaining 30 going towards the budget.

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In an interview IMF Country Manager Farayi Gwenhamo said the fund was monitoring the situation and would take it up with the authorities during the Extended Credit Facility (ECF) discussions.

“There were commitments under the RCF disbursed in May 2020 and in October 2020 for the authorities to publish and audit Covid public spending in order to promote transparency and accountability.

“We have been monitoring closely implementation of these commitments, which has been slow. We will be discussing with the authorities in the context of the next mission,” Gwenhamo said.

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This comes against the background of queries made by experts recently during a mid-year budget analysis workshop organised by the Economics Association of Malawi (Ecama) in Lilongwe.

One of the panelists during the workshop, who is also Governance Programme Manager for Oxfam Mathias Kafunda said weak expenditure controls undermined budget credibility and fiscal discipline.

“Currently, actual expenditures have gone beyond what we had projected at this time. We need to address two questions: Should we make the Covid a smart excuse for lack of fiscal discipline or should we give away all the regulatory framework and policies that guide budge t execution because we are in a pandemic? No,” Kafunda said.

Treasury spokesperson Williams Banda said the RCF funds were used for Balance of Payment position strengthening at Reserve Bank of Malawi and another K30 million came in as direct budget support.

Meanwhile, commenting on debt management, Banda said the government has debt sustainability strategy where only concessional loans are being considered.

“The non-taxes and dividends are expected to perform during the second half due to enhanced monitoring and enforcement. Total public debt is at 54 percent currently and not as highlighted,” he said.

Presenting the Mid-year Budget Statement in Parliament, Minister of Finance Felix Mlusu said, during the first six months of the fiscal year, government expenditures were over and above the target of K974.6 billion by 2.5 percent.

Among other factors, Mlusu attributed the surge to “unforeseen expenditures towards Covid pandemic management” and re-administration of the Malawi School Certificate of Education Examinations.

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