IMF programme off-track, Malawi $20m loan witheld

The International Monetary Fund (IMF) has said that Malawi’s US$150 million extended credit is off-track following the Peter Mutharika government’s failure to meet agreed targets with the fund and that second tranche of funding of about US$20 million under the programme will not disbursed.

Gondwe: Off track

Gondwe: Off track

This will compound Malawi’s fiscal difficulties and increase pressure on the overvalued kwacha.

The ECF has been derailed mainly by the government’s spending beyond its target.

An IMF team led by Washington DC-based Malawi mission chief, Oral Williams, disclosed during the presentation of their review findings at Capital Hill in Lilongwe on Wednesday.

“Fiscal slippages equivalent to about two percent of the GDP emerged during the second half of the 2014/15 fiscal year, in part because of overspending on the wage bill and these were exacerbated by revenue and external financing shortfalls,” said Williams.

He said: “Corrective measures undertaken to offset the slippages were insufficient. As a consequence, the end-June 2015 program target on net domestic financing was not met.

“On the structural side, structural reforms in the financial sector were carried out as planned, but programmed improvements in public financial management (PFM) were delayed.”

IMF called for restoring macroeconomic stability by bringing inflation—which has been stuck above 20 percent since mid-2012—down to single digits.

“ To this end, tight monetary and fiscal policies are needed. Given ongoing external financing shortfalls, the budget should be financed in a sustainable manner and expenditures prioritized with a view to safeguard social spending,” said IMF.

The global lender said planned reforms to the farm input subsidy program aimed at increasing expenditure efficiencies are a welcome step, while measures to boost revenue mobilization are critical in responding to growing developmental needs.

IMF also pointed out that strengthening public financial management systems is integral to safeguarding public resources and restoring confidence in budgetary processes.

The mission said it met Minister of Finance Dr. Goodall Gondwe, Governor of the Reserve Bank of Malawi Charles Chuka, other senior government and RBM officials, a broad range of national stakeholders outside government, as well as representatives of Malawi’s development partners.

Gondwe, has since admitted that things are out of hand and that a team of experts at his ministry is already working on reducing the budget from K930 billion as approved by Parliament in June.

“We will have to come up with a revised expenditure in the budget,” said Gondwe.

Meanwhile, IMF said Malawi’s economic growth will slow to 3 percent this year from 5 percent in 2014 due to severe flooding in January that affected food production.

The IMF said the slowdown in growth reflected the steep decline in the 2015 maize harvest, disrupted by floods early this year that killed at least 79 people.

Follow and Subscribe Nyasa TV :

Please share this Article if you like Email This Post Email This Post

More From the World

Sort by:   newest | oldest | most voted
chimwemwe
Guest

Goodal Cancels subsidy programme

kachikho
Guest

There was no need to think of revising the budget downwards . I cry for my beloved country. Let us just deal with corruption. I remember there was time when our late president Bingu used to say that we could develop the country using our own resources and at that time MRA was able to collect so much above target and the excess was used for other developments like construction of roads. But now there is total chaos at MRA. Where is MJM Phiri and the people that were responsible for that good performance?

Telling the Truth
Guest
It comes as no surprise that Peter Mutharika’s DPP is failing Malawians. Let us not forget that DPP brought Malawi to her knees by April 2012. And the same people who were in charge of DPP in April 2012 are back in charge of DPP except Bingu wa Mutharika who died. The truth is that DPP does not have a new vision and policy to take Malawi forward. The DPP’s community technical colleges program is based on a fundamentally flawed reasoning that there is adequate demand for goods and services to create additional jobs. So Malawians should be ready to… Read more »
Jabulosi
Guest

JB was far much better than this goat!!!! The problem was that Amai found cashgaters already established in the system and retained Ken Lipenga as finance minister. These people connived to destroy her despite her good efforts. Thus today Malawi is back to square one if not worse than Bingu’s time!!!DPP should be kicked out immediately!!!These are destroyers, we should bless ourselves with even tougher times ahead because 2019 is too far away. Period!!!!!

benjnes
Guest

please people of malawi let us not just talk but act for once. we are not going to work for one week mid october this msg goes to all

NH
Guest

Even if….repeat even if fiscal situation is not so poor, as it is at present, even then govt spending should not be as high as it is at the moment. Ad how can / dare president of such a poor country dare to hire very expensive aircraft for his comfortable travel ? This is a big ..big question indeed which the respectable president needs to ponder over. At best he should have gone to NY by a regular flight but only if he really cared for the starving masses.

Chimani. Game
Guest

If the president can spend over half a million USD on a chartered jet how do you expect I MF to react on that.this fool of a president must be removed by any means.malawians,you need to act or else you will suffer to hell

Ras Manthanyula Peter
Guest
Ras Manthanyula Peter

Legalize hemp growing, use and trade in Malawi. Key issue is we need find new avenues to generate income to fund goverment programs while creating local employement.

mulamu pelekani@gmail.com
Guest

IMF punish any country which missmanage the economy, not only Malawi. So dont be rude beggars. If they give money you ondinary people will not see the money. So what difference does it make. He hires one of expensive jet plane. OUT MED PETER AND DDP.THESE PEOPLE DID NOT
WIN. THIEVES.

lloyd mpofu
Guest

They (azungu) are failing to admit that they don’t ve the money.Otherwise they are even failing to help their colleagues such as Spain, Greece,Turkey and the like who are in big financial woes. How can they help Malawi while they know they have nothing to steal from her.

wpDiscuz

More From Nyasatimes