New Extended Credit Facility talks pushed to second quarter
Malawi would wait a little longer before a new Extended Credit Facility (ECF) programme is in place as talks over the fresh arrangement would commence in the second quarter.
International Monetory Fund (IMF) Country Manager Farayi Gwenhamo said Wednesday that the government officials are in pre-liminary talks with the new IMF mission team.
She said Malawi would only access funding from the Fund after completion of a successful programme negotiation.
“As you may know, we have a new IMF Mission Chief for Malawi, Ms Saito Mika, so we are currently holding pre-mission technical discussions with the authorities. The actual mission is expected to start in early Q2 2021,” Gwenhamo said.
When asked whether the country may have an opportunity to access extra funding under the Rapid Credit Facility (RCF) in the interim, Gwenhamo said chances remained slim.
Last year the IMF disbursed about $192 million for emergency Covid support, $91 million in May 2020 and $101 million in early October 2020.
She said the first disbursement was 100 percent Balance of Payment (BoP) support and the second disbursement was 70 percent BOP support and 30 percent budget support.
“While I cannot say with 100 percent certainty, it is highly unlikely to go for a third RCF but rather to engage in negotiations for a multi-year arrangement,” Gwenhamo said.
Treasury spokesperson Williams Banda confirmed that the authorities are engaging the new mission.
“We have started discussions with the IMF but currently our discussions are just briefing sessions to the new Mission Chief to Malawi,” Banda said.
In September last year, the government announced to have cancelled the ECF programme with the IMF, saying they were working towards negotiating a new pact.
This mean the country forfeited S70 million under the three-year ECF programme with the fund.
However, cancellation of the arrangement could not affected funds already disbursed under the programme which was approved in April 2018.
According to information on the IMF website Malawi has outstanding purchases and loans amounting to SDR300.16 million (about $433.11 million) as of December 31, 2020.
This is coming at a time the country’s resource envelope is constrained witnessed by recent figures from the Reserve Bank of Malawi which show that domestic debt stock surged by K104.6 billion between November and December 2020 to K1.103 trillion.
In July 2020, public domestic debt was seen at K916.7 billion, and rose to K1.0 trillion in August.
In September, the debt stock surged further to K1.1 trillion before going down to K948.4 billion in October and rising again to K999.0 billion in November.
Figures available show that, comparatively, in July 2020, government revenue stood at K107.8 billion, down from K103.3 billion in August.
The revenue reduced further to K102.7 billion in September 2020 but went up in October to K127.3 billion.
The government revenue declined to K93.7 billion in November and closed the year at K149.7 billion in December.