IMF offers hope for Malawi: ‘Economic performance has been favourable’

The International Monetary Fund (IMF) has given Malawi a flicker of hope for   continued Extended Credit Facility (ECF) programme, saying the recent economic performance has been favourable and the country should expect two disbursements from the funds linked to the second and third reviews.

Addressing a news conference at the end of its week-long mission to conduct discussions on the combined second and third reviews of the three-year arrangement for Malawi under ECF, the head of IMF for Malawi Pritha Mitra said the fund was pleased that performance under the programme has been “good.”

“All but one of the quantitative performance criteria (QPC) for end-June were met. The target on the primary balance which is fiscal balance that excludes interest payments was missed largely due to shortfalls in tax revenues, unexpected goods and services spending to hold elections and to support post-cyclone disaster relief, and increased domestic development spending,” Mitra said.

She asked government o enhance spending in infrastructure, health and education sectors as well as on social services.

Mitra said there is need for Malawi to find ways of improving revenue and efficiency of spending including better public investment management.

IMF mission chief for Malawi said the fund was pleased that the real gross domestic product (GDP) growth rate for the country this year will rebound to 4.5 percent, buoyed by strong performance in agriculture sector, coupled with reconstruction of infrastructure that was damaged by Cyclone Idai, especially the Southern Region earlier during the year.

The fund projects that Malawi’s real GDP growth rate will be between 6 and 7 percent in the medium to long-term.

“Over the medium term, growth could rise further to 6-7%, backed by greater access to finance, crop diversification, an improved business climate and more resilient infrastructure, including improved electricity generation,” the IMF chief said.

Minister of Finance, Economic Planning and Development, Joseph Mwanamvekha has also projected an economic growth rate of 7 percent next year.

He said government is committed to fulfil what they have agreed with IMF to continue registering growth.

“We expect that when they conclude the with the board on the matter, they should continue assisting us with resources,” he said.

Mwanamvekha said Treasury has asked IMF to increase resources allocated to Malawi.

“The IMF programme is supposed to increase our resource Basket to the tune of $112million and we have so far received $22 million,” he said.

So far, Malawi’s year-on-year inflation rate has been in single digit lane  Inflation is a macroeconomic variable, which together with interest rates and exchange rates, give indication of stability of an economy.