Finance minister Goodall Gondwe has cast a shadow of hope that the government will be on track with the International Monetary Fund (IMF) extended credit facility in February 2016, a move that will trigger the coming back of Malawi’s traditional donors.
Speaking during a round table discussion on Monday in the capital Lilongwe organised by the Reserve Bank of Malawi to commemorate 50 years of its existence, Gondwe said the government has cut down on borrowing drastically to tame inflation, one of the conditions imposed by the global lender.
“We are spending less, therefore we are borrowing less. The figures show we are doing extremely well. Infact we have not borrowed in November,” said Gondwe trying to give hope to Malawians who are frustrated and live in despair in the current economic turmoil that has pushed the cost of living drastically up.
Inflation is hovering at around 25 per cent, the highest in the region, which means the cost of food and basic things in Malawi is very expensive compared to other countries in Sadc.
But Gondwe said the IMF team, which is coming next week to see how the government has performed, will recommend that the extended credit facility resumes.
He said the government is making sure that the economic policies are in tandem with monetary policies hence the drastic cutting down on borrowing by the Reserve Bank of Malawi from commercial banks and other entities to tame the inflation.
But Chancellor College professor of economics Ben Kalua expressed strong reservations that the Government will be on track with the IMF extended credit facility.
Kalua said the government has excessively borrowed from financial markets and has even issued bonds, long term borrowing which can take up to two years of repayment period.
“Economic fundamentals show that we are not doing well. I doubt if we will have the IMF extended facility in February,” he said.
He said the excessive borrowing is negatively impacting on the economy because it is more than what the Malawi Revenue Authority can collect.
President Peter Mutharika has flown in ordinary plane on his three nation tour as opposed to the usual chartering of presidential jet, as a means of cutting down on expenses.Follow and Subscribe Nyasa TV :