Malawi President Bingu Wa Mutharika played host to a team of the Bretton Woods’ Institution, the International Monetary Fund (IMF) in Lilongwe where over an hour of talks seem to have started sending a positive signal over Malawi and her patiently-waiting donors.
An IMF staff team, led by Tsidi Tsikata, concluded a two-week visit to Malawi on Monday April 2nd 2012 to conduct discussions for the 2012 Article IV consultation.
Unlike the other Bretton Woods sister World Bank Mission that visited a month ago and President Mutharika failed to meet the officials, the IMF mission paid a courtesy call on the Malawi leader and held discussions with Minister Ken Lipenga (Finance and Development Planning), Minister Peter Mutharika (Foreign Affairs and International Cooperation), Minister Goodall Gondwe (Natural Resources, Energy and Environment).
The team also met Governor Perks Ligoya of the Reserve Bank of Malawi, Chief Secretary Bright Msaka (Office of the President and Cabinet), and other senior government and RBM officials.
The team still in search for ways to have Malawi return on its programme, also met with representatives from the donor community, civil society, trade unions and the business and banking sectors.
“The mission is grateful to the authorities for their cooperation and warm hospitality. We have had constructive discussions with the authorities on the economic challenges currently facing Malawi,” said Tsidi Tsikata the Mission leader.
The team acknowledged that Malawi is grappling with a severe foreign exchange shortage that contributed to a marked slowdown in economic activity in 2011.
The country’s real GDP growth slowed from an impressive average annual rate of 8.3 percent during 2007-10 to about 4½ percent in 2011.
Agriculture, the team noted, has been the main engine of growth, supported by the government’s Farm Input Subsidy Program and good weather conditions.
“The foreign exchange situation has led to shortages of fuel, imported inputs and medicines. Several enterprises have scaled down or closed their operations and laid off workers,” the IMF Chief said.
The team will report to the Executive Board of the Fund which will meet and review and hopefully conclude Malawi’s case next month.
The positive discussions have already sent some hopeful signals to the Common Approach to Budgetary Support (CABS) a pool of donors represented in Malawi that helps to shore-up Malawi’s deficit in its foreign payments.
“We have started well and our hope is that by July 1 we will have all donor support back to help our budget. The team left with clear understanding of where we stand on the issue of devaluing the local unit without having any substantial forex reserves to mitigate the shocks that may be caused,” said one government official close to the discussions.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, every 12 months for countries without Fund programs and every two years for countries with a Fund program. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies.
On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities.
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