IMF tips Malawi, others on financial management


The International Monetary Fund (IMF) has tipped Malawi and other least developed countries to be prudent in public finance management to avoid avoidable spillages.

The fund suggests adoption of prudent policies in safeguarding public resources.

This is contained in a statement the Breton Woods institution issued recently in which it says most countries in the sub-Saharan African region face important monetary policy challenges due to the Covid pandemic which dented economic growth prospects.


It says the recovery process is likely to leave output below the pre-crisis trend this year.

IMF indicates that it remains important for governments to reduce the vulnerabilities.

“While additional tools can help alleviate short-term trade-offs, this benefit needs to be carefully weighed against potential longer-term costs. Such costs may include, for instance, reduced incentives for market development and appropriate risk management in the private sector,” the statement reads.


On the local scene, the Reserve Bank of Malawi has accepted the economy faces myriad challenges due to the pandemic and other external shocks.

A recent RBM Market Intelligence report states that the ongoing geopolitical tension between Russia and Ukraine is also cause for concern as the higher than anticipated oil prices induced by the phenomenon could delay the convergence of inflation to medium term targets in most countries.

The report adds that the developments could compel central banks to implement less accommodative monetary policies that could jeopardise economic recovery plans because, if big economies such as the United States tighten their monetary policy stance, risks of currency depreciations in lower economies and fuel inflation pressures could intensify.

“Domestically, RBM continues to monitor both domestic and global developments and take necessary action to mitigate any risks to the inflation outlook that are perceived to be permanent,” the report reads.

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