A critical examination of the alleged IMF misreporting – who is fooling who?
The International Monetary Fund (IMF) Executive Board on 15th December 2021, released a report on its conclusion of the Article IV consultations with the Republic of Malawi which is a precursor towards the establishment of a new Extended Credit Facility (ECF) program for Malawi after the current Tonse-led Administration cancelled the previous 2018 ECF program with IMF in November 2020.
What is tongue-in-cheek is the fact while the Government of Malawi has been ferociously and relentlessly attacking the previous Democratic Progressive Party (DPP) in public as the reason why the country does not have an IMF program, behind the scenes, they have been working with the IMF to conclude negotiations on a new program. This is quite ironic.
Key among the criticisms the Tonse-led Administration has been vilifying the DPP is that of misreporting of Net International Reserves (NIR) to the IMF. What is surprising therefore is the fact that the IMF report has not conclusively suggested that there was misreporting as the Government has made all of us in this country to believe.
The statement by the IMF Executive Board on this matter reads as follows:
“Directors noted potential noncomplying disbursements during the 2018 Extended Credit Facility arrangements with the IMF and the need for resolution of this case of potential misreporting ahead of new programme.”
The statement from IMF is a sharp contrast to what the Officials of Malawi Government have been saying in and out of Parliament. The Minister of Homeland Security, the Minister of Information and the Attorney General were all out on record with certainty that the previous Government misreported and lied about the figures to IMF.
As if that’s not enough, the Government went ahead to arrest the former Minister of Finance, Hon. Mwanamvekha and former RBM Governor, Dr. Kabambe on the same. The Director of Public Prosecution (DPP) spoke with authority in Court citing that IMF had told them in all certainty about the misreporting and that he told the Court that what the two did was treason and economic sabotage as their actions had led to the IMF not giving Malawi a program which meant that the country loosing out as much as US$108 million in program support, hence the economic turmoil in this country.
So why is IMF saying ‘Potential’?
The entire case against Hon. Mwanamvekha and Dr Kabambe hinges on the facts that IMF is failing to give Malawi a new ECF on the basis that there was misreporting on the previous ECF. Now what’s strange is that the same IMF on 15th December is urging the Government to resolve the ‘Potential’ misreporting.
By saying potential, it might mean that after investigation, it might be either true or false and it’s very surprising for a DPP who holds PHD in law to base his case on a potentiality when he is supposed to prove beyond reasonable doubt about the stated case.
What is really happening?
In 2018, the IMF and GoM entered into a three year ECF with agreed parameters for reporting. As robust as the process is, every quarter (3 months) the IMF teams come to Malawi to monitor implementation and compliance with the reporting parameters that was agreed at signing of the ECF.
Since 2018, 2019 and to mid-2020, the IMF was happy with the reports it was getting from the Malawi Government and therefore continued to give the nod on the ECF program which triggered the subsequent disbursements of quarterly Balance of Payment (BoP) support which totalled US$108 million over the three year period .
When Tonse Alliance came to power, they were cheated that the IMF ECF program is evil and Malawi can do without the IMF. Yes, the entire system was misled by the so called ‘Economists’ who preaches against IMF programmes and as clueless as the Administration was, by November 2020, they unceremoniously cancelled the 2018 ECF with the IMF unilaterally.
Come January 2021, the Tonse Alliance realized that Malawi needs IMF and went back knocking at the doors of IMF. This time around, IMF had a new team and when they reviewed the previous report and the current economic status of Malawi, made an observation that some of the figures that were reported were way off.
This gave the Tonse Alliance a scapegoat and started blaming the DPP Government for misreporting and blaming lack of the new ECF on that.
The reality of the matter is that Malawi has no new ECF because the Tonse Government ignorantly under false information ended the previous ECF in November 2020 without foresight.
Whither to the misreporting fiasco?
The IMF has recommended that an Auditor should be hired to relook at the official reserves numbers over a period of time so that the issue of misreporting can be ascertained and objectively concluded and that benchmarks for the new program can be established.
Meanwhile, the state has already shamelessly arrested the former Minister of Finance and the former Governor of RBM on something yet to be established. It therefore remains to be seen as to what direction the case will take in Court.
There is a strong likelihood that the tax payers will have to shoulder expenses for compensating these officials for wrongful arrest, defamation, and whatever adjective our leaned colleagues will come up with.
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The IMF is very much aware of the legal processes that have commenced in Malawi on the very matter. Their report, therefore, had to be very diplomatic as not to be seen to be getting involved in the domestic legal processes. I can assure you that they have all the facts under their fingertips. Story yanuyi baba is a product of shameless solicitation.
Jawadu, the author, seems very well informed about this issue. Yet he has clearly chosen to issue a defense rather than a balanced analysis. Good effort , Mr Deekay!
A report written by a DPP sympathiser too much bias and lacks objectivity……. That`s my view
Eeeeeish, that quote from IMF diplomatic enough to tell you there were issues. IMF doesn’t write like courts. For an Economist that’s enough to tell you kuti wina wanyika….
When you have no solutions you find escapegoat to justify your failure. That’s what the government is doing
Banganya mwafwasa kuphamula utesi. Soni mulije!
There is no way government would have acted the way they have done if what the author is saying is true.
In this case, potential simply means “likely to happen again ” But since the author is DPP agent, we are likely to read factless articles like this one. Time wasting!
I just sa it is lack of accounting and economic knowledge which has lead to this. In every loan and credit facility in every institution there is potential overstatement of profits and revenue to show good picture. In case of country to there is a potential overstatement of reserves. In this case the guys have been arrested on assumption not reality. There is a need for accounting and economic knowledge.
Nyenkhwe Tonse government kupupuluma.