By Mike Kamande, contributor in Washington DC:
Finance Minister Simplex Chithyola Banda has admitted that Malawi is facing challenges to stay on course in implementing the Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF).
This came out at the beginning of the Annual Spring Meetings of the IMF and World Bank in Washington DC, United States.
On Monday, the Malawi delegation, led by the minister, outlined remedial measures being undertaken by the government to counter challenges undermining implementation of the programme.
- Advertisement -
They were meeting Head of IMF African Department Head Abebe Selassie and IMF Mission Chief for Malawi Mika Saito.
- Advertisement -
However, Chithyola Banda said government remains strongly committed towards achieving the programme objectives.
“Malawi is committed to bringing the fiscal position back on track and the 2024-25 budget aims at a primary deficit in line with the programme which will require a stronger fiscal adjustment effort than previously envisaged. We are working on detailing the tax policy and tax administration measures underpinning the ambitious revenue projections.
“While devaluation did not lead to the expected dynamics in terms of Reserve Bank of Malawi (RBM) capacity to become a net purchaser of forex from the market, it is ready to explore possible reforms to make the foreign exchange market more liquid and efficient. Government is also determined to restore debt sustainability,” Chithyola Banda said.
IMF’s Selassie said it is important to enhance both resilience of the people and microeconomic resilience especially in the wake of incessant natural disasters such as El Nino-induced drought and floods.
- Advertisement -
“You need to address the microeconomic environment through introduction of strong fiscal policies. Our ability to move forward with the programme requires strong fiscal policies despite the numerous challenges Malawi faces,” Selassie said.
IMF Mission Chief for Malawi Mika Saito said good programme performance and debt restructuring progress will ensure that Malawi stays on course with the hard-won ECF programme.
RBM Governor Wilson Banda said the ECF programme has underperformed because RBM hasn’t been a net purchaser of forex after the devaluation and challenges emanating from natural calamities.
“El Nino has affected us negatively with fuel demand remaining very high and the monetary policy remains tight,” Banda said.
The IMF and World Bank Group meet each autumn in what is officially known as the Annual Meetings of the IMF and World Bank Group with the latter focusing on macroeconomic and financial stability while the former concentrates on long-term economic development and poverty reduction.
