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IMF yet to decide on Reserve Bank of Malawi misreporting

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Sosten Gwengwe

The International Monetary Fund (IMF) is yet to come up with a decision on the Reserve Bank of Malawi (RBM) Forex Misrepresentation Audit Report which Lilongwe submitted as part of the requirements for unlocking the four-year Extended Credit Facility programme, The Business Times has established.

Finance Minister Sosten Gwengwe confirmed the development Tuesday, saying the IMF Board will look at the Forex Misrepresentation Audit Report when considering the approval of the Staff Level Agreement for Malawi once it is reached with the fund’s staff.

The development could mean an even longer wait for Malawi before it gets its much-needed ECF programme.

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“IMF board is yet to meet on the misreporting but RBM already implementing controls as proposed in the audit report. Yes board had wanted to tackle it together with ECF.

“IMF doesn’t lend into a country with a high debt risk. We are looking at creating ways to deal with this,” Gwengwe said.

Around June this year, Gwengwe told Malawians that the country risks paying back some dollars realised as benefits of the forex misrepresentation.

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IMF Resident Representative Farayi Gwenhamo was not immediately available for comment yesterday.

On Thursday, IMF Director of Communication, Gerry Rice, told reporters in Washington DC that the Fund is concerned with the debt situation in Malawi and is watching very closely to see what progress can be made.

During Thursday’s briefing, Rice was asked as to what the Malawi Government needs to do to get programme talks back on track with the media wanting to find out which creditors specifically the government needs to restructure loans with.

Rice said Malawi is facing significant challenges including high poverty incidence in the case of Malawi, despite the reforms that have been attempted by the authorities.

“We are seized of the seriousness of the situation. We are concerned. We want to help. And we’re now watching this situation very closely on the debt front to see what progress can be made,” Rice said.

He said over the last several months, the IMF has been having very productive discussions with the Malawi Government on their request for a program with the Fund.

“Again, it’s becoming a very continuing refrain. Their request was for an Extended Credit Facility Arrangement, actually. So, those discussions are ongoing. They’ve been happening remotely and, again, with a view to supporting Malawi.

“ I don’t have a breakdown of creditors for you right now. I’m sure we’ll get there. But what I would say is that Malawi’s public debt is unsustainable. And the authorities have engaged debt advisors to restore debt sustainability. We don’t, as is the case with all countries, we don’t get involved in those detailed discussions between authorities and creditors. We try to play a helpful role but we don’t get directly involved. Those are facilitated by the authorities and by the debt advisors,” Rice said.

Last week, an IMF Mission to Malawi was carried forward as Lilongwe wanted assurances that the mission would end up in a Staff Level Agreement being reached with the fund.

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