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Long wait for next IMF credit facility

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Betchani Tcheleni

The Ministry of Finance has said discussions are underway with the International Monetary Fund (IMF) on the new Extended Credit Facility (ECF) programme.

Earlier, the Treasury said it wanted to conclude the negotiations by April this year to consider some of the agreements and conditions in the next financial plan.

However, it remains unclear if the discussions would be concluded prior to passing of the 2021/22 national budget, which Finance Minister Felix Mlusu is expected to table in Parliament on Friday.

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Ministry of Finance spokesperson Williams Banda could not divulge details regarding the delay in concluding the negotiations.

He, however, said the new ECF programme will be in line with the 2021/22 budget.

“The discussions are progressing well and the public will be informed once finalised. Obviously, this would be before the end of this financial year. The new ECF programme will be in tandem with the 2021/22 fiscal year,” Banda said.

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There was no immediate comment from the IMF Resident Representative Farayi Gwenhamo on whether the negotiations have commenced.

However, in a recent interview, Gwenhamo said the negotiations were yet to start but the two parties were in a pre-mission discussion.

Malawi University of Business and Applied Sciences-based economist Betchani Tcheleni said Malawi needed a new facility with the fund as it signals confidence to other development partners.

“At the moment, the ECF is something we need. We may not play around it carelessly. We are in a bounty period where we have started to gain some foreign exchange but we still need more foreign exchange.

“However, the terms of the facilities need to be carefully negotiated. As much as we are desperate, we should not hang ourselves carelessly. The interest payments and levels must be agreed upon carefully,” Tchereni said

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