Minister of finance Sosten Gwengwe is keeping his fingers crossed over a possible Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF), about 36 months after cancellation of the previous programme in September 2020.
But he echoed a sentiment by the Reserve Bank of Malawi (RBM) Governor Wilson Banda who recently observed that 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 IMF.
In an interview on Friday, Gwengwe acknowledged that it has been a roller-coaster ride to get a fresh mission with the Bretton Woods’ institution which depends on Malawi’s performance on the current staff-monitored programme.
“We are very hopeful that this ECF mission is going to be successful but it is still in very early stages.
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“We have been where we are for some time and now moving towards an actual mission that might lead into an ECF, for us, it is a milestone and we are excited to put together the programme finally and see the sort of impact an IMF programme can bring to our economy,” Gwengwe said.
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He said the primary objective of the anticipated ECF is to first restore macroeconomic stability, and necessitate growth in all sectors of economy.
He added: “It is about putting the actual programme intact. Once the programme is agreed then it guarantees almost always that it will restore macroeconomic stability within the programme period which is about three years, Malawi should be a rising star and booming economically.”
In a recent interview, former Chief Economist for the International Monetary Fund (IMF) Godfrey Kalinga said he does not see the country securing a fresh ECF programme ahead of the election coming up in 2025.
He stressed that there are a lot of political decisions to make to turn around the economic fortunes for Malawi.
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“At the moment the gap between the revenues and expenditures is very large and the government will need to look at particular activities that they will need to abandon or save and begin to meet the (IMF) targets. I think the gap is so large that the Minister of Finance alone can sit down and work out.
“We need to have the president directing and giving in where political priorities are, for it to work, because very big and monumental programmes like the carriage ways in Lilongwe or the Affordable Input Programme (AIP) will need to be rethought before one goes on. These are heavy political issues that need to be tackled. It is not the Ministry of Finance but the political choices,” Kalinga said.
An International Monetary Fund (IMF) Mission is expected in Malawi from September 12 to 19 to review the country’s performance under the Staff Monitored Programme with executive board involvement that was approved in November 2022.
A recent review of Malawi’s performance in line with the Bretton Woods’ 12-month Staff- Monitored Programme found that Malawi is on track.
“The authorities are taking corrective actions necessary to demonstrate their capacity to implement the agreed macroeconomic adjustment and reforms, as well as to build the policy track record needed to support their prospective request for an ECF arrangement,” said IMF Deputy Managing Director, and acting Board Chairperson Bo Li in a statement.
