President Peter Mutharika has said he is humbled with International Monetary Fund (IMF} resumption of aid to Malawi.
The IMF board on Monday nodded to an immediate disbursement of US$18.1 million (K8 billion) in balance of payment support to the country.
Mutharika said he is “delighted” to note that at the conclusion of the discussionMitsuhiro Furusawa, Acting Chair and Deputy Managing Director, observed that the DPP-led government is showing commitment to rebuilding trust in public institutions.
“I must say that my administration will continue to improve the available regulatory frameworks which are key to safeguarding financial sector stability,” he stated.
Mutharika asked Malawians to join hands to seal all the loopholes and tighten the financial management systems.
Minister of Finance Goodall Gondwe has also said IIMF resumption of aid to Malawi was pleasing but said government will not rest on their laurels as they need to continue putting in place structures that will ensure good financial management.
Gondwe said IMF decision shows that the country has passed the test on its ability to manage its affairs.
“Of course they have given us criteria which we need to follow as well which we will make sure we do,” said Gondwe, citing the limit on borrowing from the banking sector and the improvement in the relationship between the Reserve Bank and the Accountant General to detect the reoccurrence Cashgate.
The Finance Minister, however, said as quoted by The Nation that the development does not mean it will automatically trigger a reaction from bilateral donors to reopen their budgetary support to Malawi.
“Budgetary support will not be resumed in the wake of this development because bilateral donors have since changed their policy in the way they will be providing their support,” Gondwe said.
He, however, said Malawi expects to receive budgetary support from the World Bank, the European Union and the African Development Bank in the 2015/2016 financial year.
“Infact the ADB are expected to start as early as June. But I don’t want to be euphoric. We need to continue to work hard and well in terms of how we are managing things. This includes putting in place structures that will ensure good financial management,” said Gondwe.
Meanwhile, analysts have asked the government to tread with caution and not to relax on fiscal and monetary policies as the economy remains fragile, Daily Times reported on Wednesday.
University of Malawi economics professor Ben Kalua who is based at Chancellor College in Zomba said the IMF disbursement will lep to ease forex woes in the country.
He said there was still need for a substantial budget support to address several other challenges the economy is facing.
“There is a requirement for more funding from other development partners. We only hope that the $18 million funding nod will help unlock the other budget support taps,’ said Kalua as quoted by Daily Times.
Kalua said government should not relax on fiscal and monitary policies adherence as “the economy remains fragile”.
An independent analyst and former Economics Association of Malawi (Ecama) President Edward Chilima said expectations of IMF aid that it will spur “ the authorities to go into overdrive so that the economy can start enjoying low interest rates, stable exchange rate and declining rate of inflation.”
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