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Malawi’s Rapid Credit Facility fate with IMF November 21

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The International Monetary Fund (IMF) Executive Board has set November 21 this year as the day it will decide Malawi’s fate on the $88.3 million Rapid Credit Facility (RCF) programme.

But Finance Minister Sosten Gwengwe Tuesday said Malawi’s immediate concern is the Reserve Bank of Malawi (RBM) forex misrepresentation audit which the IMF board will be looking at today.

The IMF Board meeting on RCF comes over a month after Malawi reached a Staff Level Agreement with it on the RCF programme.

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According to IMF Board calendar posted on the Bretton Woods institution’s website, the board will on November 21 look at Malawi and Mozambique’s cases.

On the part of Mozambique, the board will be looking at the first review under the Extended Credit Facility.

Gwengwe Tuesday described the IMF Board meeting on the forex misrepresentation audit as the immediate headache for Malawi.

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“Wednesday [today], the IMF Board discusses the misreporting issue. Will cross the RCF bridge next week but [our] immediate headache is the misreporting [issue],” Gwengwe said.

The RBM forex misrepresentation audit as well as the debt management plan are standing in Malawi’s way for an Extended Credit Facility (ECF) programme.

In June this year, Gwengwe hinted at the worst case scenario where IMF would demand the repayment of funds the country accessed under the cancelled ECF programme.

Last month, Malawi became the first low-income country to reach a staff-level agreement to receive up to about $88.3 million (50 percent of Malawi’s IMF quota) in emergency financing through the IMF’s new Food Shock Window under the RCF.

Malawi also appealed for programme monitoring with IMF Board’s involvement .

The emergency financing under the new Food Shock Window is expected to help Malawi address urgent balance of payment needs related to the global food crisis.

On the other hand, programme monitoring with board involvement would support the government’s economic reforms to restore macroeconomic stability and provide the foundation for an inclusive recovery.

In a statement last month, IMF Mission leader for Malawi Mika Saito said a credible process on debt restructuring needed to be underway prior to the IMF Executive Board’s consideration of Malawi’s request.

“The authorities are strongly committed to continuing their efforts to implement structural reforms and prudent macroeconomic—fiscal, monetary and exchange rate—policies, which, together with the ongoing debt restructuring process[es], will steer the country towards macroeconomic stability and a sustainable debt path.

“In turn, this will help set the foundation for inclusive growth and improve the life of Malawians,” Saito said.

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