The Executive Board of International Monetary Fund (IMF) is expected to jet in the country next month to conduct its third review on economic performance under a program supported by the Extended Credit Facility (ECF) arrangement, Minister of Finance Ken Lipenga has said.
The third review comes two months after the Board completed its second review, the decision that enabled the immediate disbursement of an amount equivalent US$19.6 million, bringing total disbursements under the arrangement to an amount equivalent to about US$58.7 million.
The three-year ECF arrangement for Malawi in the total amount of SDR 104.1 million (about US$156.2 million) was approved on July 23, 2012.
Presenting the 2013/14 national budget statement in Parliament on Friday, Lipenga revealed that the next IMF would be done next month and was hopeful of remaining on track.
“The first and second reviews of the programme were successfully completed; as a consequence, SDR39.1 million an equivalent of US$58.7million has been disbursed under the programme. The third review will be conducted in June 2013 when the IMF mission returns to Malawi. We are confident that this review will also be successful and we will remain on track,” Lipenga said.
Lipenga said government had to implement the 2012/13 budget within a framework designed to deal with the challenges faced to be able to restore the confidence of country’s international partners, including the IMF.
“IMF noticed our determination to deal with our own problems. The successful resumption of the programme with the IMF, in turn, allowed us to unlock budget support from the Common Approach to Budget Support development partners. The unlocking of budget support and increased support from all our development partners was an essential component of the economic recovery process”.
Malawi’s development partners include the European Union, the United Kingdom, the World Bank, Norway, Germany, African Development Bank, and Irish Aid.
President Joyce Banda’s administration last year adopted Economic Recovery Plan (ERP), which has been criticized by different sectors including the opposition parties following the introduction of some policies such as Automatic Fuel Pricing Mechanism and floatation of Kwacha that resulted in high inflation rate and excessive rise in cost of living.
In April upon completing the second review IMF hailed Malawi’s performance under the Fund-supported program as commendable despite a difficult environment, saying the policy reforms had begun to yield positive results, including increased availability of foreign exchange and that government successfully rolled out its social protection programs.
“Continued tight monetary policy and fiscal restraint are needed to contain aggregate demand, stabilize the exchange rate and prices, and boost international reserves. The Reserve Bank of Malawi (RBM) is committed to maintaining a tight monetary stance until inflation pressures recede. The fiscal authorities are also committed to implementing prudent policies in the run up to the 2014 general elections.
“The authorities are also pursuing reforms to broaden the tax base, improve revenue administration, and exercise greater control over expenditures. The authorities are making progress in implementing structural reforms to enhance the country’s competitiveness and exports. They are committed to removing regulatory hurdles to doing business in Malawi”.
And Lipenga forecast that the economy would grow 5.0 percent this year, up from 1.8 percent in 2012, with inflation to fall to 14percent by the end of the year, down from 30-plus percent today.Follow and Subscribe Nyasa TV :