IMF says Malawi in crisis situation: Mkwezalamba downplay fears

The International Monetary Fund (IMF) has said Malawi is in a crisis following donors withholding aid to the impoverished southern African nation in reaction to a growing scandal over government graft known as Cashgate.

IMF Mission Chief Tsidi Tsikata said this at a news conference organized to brief the media on the outcome of its two week mission in Malawi to conduct discussions for the third and fourth reviews under Malawi’s Extended Credit Facility (ECF) arrangement.

The IMF team has been in the country from November 5 to 20, 2013 on a make-or-break mission to gather information on the Cashgate scandal.

Its fact-finding efforts will determine Malawi’s fate on whether the IMF will further disburse its $20 million under the ECF.

Mkwezalamba: Malawi will not borrow heavily
Mkwezalamba: Malawi will not borrow heavily

“This is a crisis situation and needs drastic actions,” IMF head of mission bold said at the news conference which was also attended by newly appointed Finance Minister Dr Maxwell Mkwezalamba.

“I am talking of the crisis because the fiscal situation was designed on the inflows of substantial amount of external support and that is at risk because of what you are probably calling it cash-gate,” he added.

He pointed out that IMF strongly condemns looting of public resources at Capital Hill, saying “the situation has triggered anger among Malawians as well as uncertainty to Malawi’s economic outlook.”

IMF boss said freeze of budgetray support is worrisome for a country like Malawi where 40 percent of its national budget comes from donor aid.

“In our interaction with Malawians, we also felt a lot of anger and frustrations [among Malawians] and I think the combination of anger among Malawians themselves speaks the challenge that the government faces and the government needs to be taking measures to address the concerns of Malawians ,” the IMF mission chief added.

In his reamrks,  Mkwezalamba down played fears that  treasury will l resort to heavy borrowing from the domestic market to fill  revenue gaps in the wake of  aid cut/

Mkwezalamba said government will spend “within available resources.”

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