International Monetary Fund (IMF) has urged Malawi government to find solutions to tax administration so that the government is able to collect more in the face of poor domestic revenue and ensure there is strict financial prudence while focusing on priority areas in social and infrastructure development.
IMF Mission Chief for Malawi, Pritha Mitra, said on Wednesday in Lilongwe during a joint news conference with Minister of Finance, Economic Planning and Development Goodall Gondwe to update the nation on the Extended Credit Facility Programme (ECF).
“We have agreed on three year programme that can be supported by an arrangement under the ECF and concluded the 2018 article IV discussions which would aim to entrench macroeconomic stability and foster higher, more inclusive, and resilient growth,” she revealed.
She said if Malawi government “spends wisely” it will help improve the productive capacity of the economy and “reduce inflationary pressures, allowing for less domestic borrowing and allow the private sector to borrow more from the banking system.”
IMF is also worried with Malawi government’s rising budget deficit over K38 billion domestic revenue shortfalls owing to Malawi Revenue Authority (MRA) under-performance in revenue collection.
The world lender has since called for a narrowing of the fiscal gap.
A statement on the findings of IMF mission said: “The authorities will deploy strong remedial measures to address the widening of the budget deficit in the current financial year and shift to a slightly positive priority balance in the next fiscal year.”
According to Finance Minister Gondwe, Malawi’s deficit is projected at K183 billion against the earlier forecast of K195 billion and he disclosed that government has revised the development budget and would now only prioritise about 25 projects that will be completed by June this year, including those wholly funded by donors.
In his remarks, Gondwe said despite some challenges, Malawi has made progress on the growth of its economy in the country for past four years and the country has managed to reduce inflation rate to single digit.
“Four years ago, the inflation rate was almost 30 per cent but now we are on single digit which shows that we have stabilized from what we had the past and we have reached this far with support from the IMF,” he pointed out.
The Minister added that, “Am very happy that the IMF came again, we had a lot of discussion and they had a number projects which they wished we could have done but we have already done them and they have re-indicated to us that we are capable of economic growth up to seven per cent.”
IMF team visited the country from January 31 to February 14, 2018 to conduct the Article IV Consultations and hold discussions with the Malawian authorities on a programme supported by the IMF’s Extended Credit Facility.
The staff-level agreement and 2018 Article IV could be considered by the IMF Executive Board in April 2018.
The Team met with the Governor of the Reserve Bank of Malawi Dalitso Kabambe, other senior government and RBM officials, a number of national stakeholders from private sector as well as representatives of Malawi’s development partners.Follow and Subscribe Nyasa TV :