By Kingsley Jassi:
The International Monetary Fund (IMF) has concluded its board meetings for the year, with Malawi not on the agenda list despite the country’s quest for the board’s approval of the first review of its Extended Credit Facility (ECF) programme.
But Ministry of Finance spokesperon William Banda has since said all discussions on the ECF with the IMF are on track and that the Treasury is aware of the entire process.
Malawi expected the first review to be approved by the board soon after the IMF mission in May.
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The mission team discussed economic and financial developments and policies that would underpin the First Review under the ECF programme at the time.
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But six months down the line, talks have continued between the fund and local authorities, with the review expected to be submitted to the board for approval and subsequent disbursement of credit under the facility.
The IMF board, which has, in recent months, made determinations for countries such as Zambia, Rwanda, Tanzania, Burundi, among others, concluded its December meetings last week Thursday.
The board receives recommendations from IMF technical teams for specific countries, and Malawi’s missing on the board’s agenda suggests failure to conclude the country’s programme review with Malawian authorities.
Malawi secured the hard earned four-year ECF programme with a $175 million credit and received the first tranche, worth $35 million.
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The programme was supposed to have periodic reviews to unlock subsequent tranches upon meeting the conditions.
IMF Mission chief, Mika Saito, said, in a statement after the visit in May, that there was a need to bring back fiscal policy to a sustainable adjustment path.
That first review, if successful, would unlock the second tranche of the four-year performance-based credit window for balance of payment support.
A local economist, Lesley Mkandawire, said in a recent interview that keeping the ECF programme on track was tricky, considering the macroeconomic situation that continued to force high domestic borrowing to cover for the growing deficit.
He said with poor revenue performance, food security concerns, high inflation rate and election-related pressures, the Treasury was likely to commit expenditure overruns that would not be in tandem with ECF conditions.
However, Minister of Finance Simplex Chithyola Banda assured Parliament, when delivering the mid-year budget statement, that the ECF programme was on track and that the government was committed to seeing it through.
In May, United States Treasury official, David Meyer, expressed concern over the state of affairs in the fiscal and monetary policy, warning that Malawi risked missing out on the second tranche of the ECF if key issues were not addressed.
