The Malawi Government has initiated discussions with the International Monetary Fund (IMF) to review some targets under the Extended Credit Facility (ECF) programme, citing concerns over their feasibility amid current economic realities.
In a recent interview, Secretary to the Treasury Betchani Tchereni revealed that preliminary discussions with the IMF had highlighted disparities between programme assumptions and conditions on the ground, necessitating a reassessment of previously agreed targets.
A high-level delegation, which included Tchereni, Minister of Finance Simplex Chithyola Banda and Reserve Bank of Malawi top officials, recently travelled to Washington DC for consultations with the IMF on potential adjustments to the programme.
“We have been saying [that] some of the assumptions that we have brought in don’t seem to speak to the realities on the ground. Some of the agreements that we have made may not necessarily be speaking to realism,” Tchereni said.
The IMF is expected to send a mission team to Malawi in February for further discussions on realigning the programme with achievable targets, marking a significant shift in the implementation approach of the $174 million facility approved last November.
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The development comes at a time Malawi continues to grapple with economic challenges — including high inflation, currency depreciation, and foreign exchange shortages—despite being under the IMF programme.
Malawi’s ECF programme risks being terminated if 18 months elapse without a successful review, according to IMF Resident Representative Nelnan Koumtingue.
In a recent WhatsApp response to a questionnaire, Koumtingue said, according to the Handbook of IMF facilities for Low- Income countries, ECF arrangements will automatically terminate before their scheduled terms if no programme review has been completed over an 18-month period.
This gives Malawi four months to register a successful review with the Breton Woods institution.
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“ECF arrangements may also be cancelled by the authorities at any time, which may be appropriate— for instance, when the underlying macroeconomic imbalances have been resolved, when the authorities no longer have the capacity or commitment to implement the programme or when the objectives or modalities of the authorities’ economic policies have changed substantialy,” Koumtingue said.
