The Reserve Bank of Malawi (RBM) has said Malawi has made remarkable progress in putting its house in order ahead of the second review of the Staff Monitored Programme with Executive Board Involvement (PMB) by the International Monetary Fund (IMF).
A successful completion of the PMB would see Malawi graduating to an upper credit tranche, the Extended Credit Facility (ECF).
The IMF Mission team is expected in Malawi in the next month for the second assessment of the programme based on June 2023 targets.
Briefing reporters in Lilongwe on Thursday, RBM Governor Wilson Banda said significant steps have been taken by the fiscal authorities to address the unsustainable foreign debt by engaging creditors to agree on debt restructuring.
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“I am glad to report that a lot of progress has been made. It is not a done deal yet, but I can almost say with certainty and confidence that we are getting there.
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“We are hoping that, by the time we go to the IMF board for the final discussion of ECF, which, in this case, will be scheduled for November, all other things being constant, we are hoping that we would’ve concluded our discussions on the debt arrangement with our creditors,” Banda said.
Currently, Malawi owes slightly over a billion United States dollars to Afreximbank, Trade and Development Bank, China, India and creditors.
He said Malawi is pushing for a moratorium or debt relief on the loans.
Banda said, on the other hand, the monetary authorities have taken gradual steps in realigning the exchange rate through the use of foreign exchange auctions as a price discovery tool.
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Banda has blamed the continued pressure on the local currency to speculation.
As of yesterday afternoon, the dollar was still trading at an elevated rate of as high as K1,800 on the parallel market, despite the official rate hovering around K1095.
Banda said, so far, the country is sitting on 2.7 months of import cover comprising 1.07 months official reserves and 1.63 months private sector reserves.
He said the pressure in the market is not supported by economic fundamentals.
During a May 2023 assessment of the PMB, which was based on December 2022 targets, the IMF indicated that Malawi passed the test.
