Minister optimistic on new IMF programme
Finance Minister Goodall Gondwe says the Malawi Government is considering striking a new deal with the International Monetary Fund (IMF) as the country draws near to the completion of the IMF’s Extended Credit Facility programme.
The current ECF programme expires on June 30. The EFC, approved in July 2012 is the IMF’s main tool for medium-term financial support to low-income countries like Malawi.
But while IMF Malawi Resident Representative Jack Ree hinted that Malawi may not need an extension of the current programme, Gondwe said Malawi still needs a new programme.
“We may go into another arrangement with the IMF for another three years. I think we will do that and they will keep on reviewing to ensure that we continue to be on track on the management of the economy,” he said.
Commenting on how the government has fared in line with IMF’s conditions, Gondwe conceded that there were slippages that once led the programme off track.
“Cashgate did us a lot of disservice not only because a lot of money was stolen but the fact that it made the donors to pull out. To manage the economy was very difficult and therefore, if you manage the economy with difficulty, then you will not be able to manage an IMF programme properly,” Gondwe said.
He however, said while the current programme started poorly, but in the end the system performed in line with set conditions.
Reacting, Economics Professor Ben Kalua said the country needs to divert from entirely banking on the IMF programme and instead, focus on rebuilding its private sector as a sustainable way of improving its forex base.
He said considering the state of the economy, the amount being disbursed under the programme over the years may not have had a substantial impact.
“There are a number of issues, one side of concern is that there are unreasonable conditionalities and we should not only be waiting for the IMF to tell us housekeeping issues,” Kalua said.
The IMF board met last week where it approved disbursement of $26.9 million to the country under the ECF programme following its 9th and final review.