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Long wait for another Extended Credit Facility

HOLDS THE KEY—The International Monetary Fund

Farayi Gwenhamo

The International Monetary Fund (IMF) has said it is still monitoring economic trends in the country and efforts by the government to manage fiscal imbalances before committing to another Extended Credit Facility (ECF) programme with Malawi.

In June 2020, Malawi cancelled the previous ECF programme following change of leadership.

But the two parties were yet to come to terms on a fresh programme for Malawi despite having talks last year.

In an interview on Monday, IMF Country Representative Farayi Gwenhamo said the fund was working towards meeting local authorities on the same.

“We have taken so much time and have prolonged discussions just to be careful to design a programme that responds to challenges in the Malawi economy. It is uncertain as to when the whole process will be completed. We are trying to understand the challenges facing the local economy.

“Part of the discussion is also looking into some milestones that need to be met. We are also making sure that those milestones have been achieved so we can move forward towards the ECF,” Gwenhamo said.

Ministry of Finance spokesperson Williams Banda asked for more time before he could comment on the matter.

Through the ECF programme, the IMF provides financial assistance to countries with protracted Balance of Payment (BoP) 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.

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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