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International Monetary Fund maintains position on Extended Credit Facility

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Felix Mlusu

The International Monetary Fund (IMF) has reiterated its stance that it is still assessing broader economy trends and developments before committing for a new Extended Credit Facility (ECF) programme.

This comes days after Finance Minister Felix Mlusu told journalists that discussions on the programme were ongoing but some of the critical targets were already missed by the previous administration.

In an interview on Wednesday, IMF Resident Representative Farayi Gwenhamo confirmed that the discussions were continuing and that the two parties were still monitoring the economic situation.

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“We are working closely with the authorities to ensure that ECF negotiations make progress. Measures to address the public debt situation are also critical. We are also assessing the long-term bonds the authorities intend to be issuing every quarter,” Gwenhamo said.

In June 2020, Malawi cancelled the previous ECF programme following the change in administration.

Cancellation of the programme in September last year meant that Malawi forfeited $70 million (about K53 billion at that time’s exchange rate).

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Through the ECF programme, the IMF provides financial assistance to countries with protracted balance of payment problems.

Policy priorities in the previous ECF arrangement were aimed at entrenching macroeconomic stability, preserving debt sustainability and advancing governance reforms.

Last month, the IMF approved $133 million in Special Drawing Rights (SDRs) for Malawi, which is expected to bolster confidence and strengthen the resilience of the country’s economy.

The SDR is an international reserve asset, created by the IMF to supplement its member countries’ official reserves.

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