Malawi’s finance minister, Maxwell Mkwezalamba, has said IMF’s release of a $20 million (around K9 billion) under the Extended Credit Facility (ECF) will encourage other donors who have withheld aid to resume funding.
Mkwezalamba told a news conference in Blantyre that the release of the IMF funds four months after cashgate corruption scandal broke and following consequent aid suspensions by key donors—is a vote if confidence in the Joyce Banda administration’s economic stewardship.
“This is a green light to our development partners to continue assisting us. And this becomes particularly important for the C.A.B.S., the Common Approach to Budgetary Support, that had decided to delay the disbursement of budget support on the account of the looting on government resources, so there is already indication that the CABS [donors] group will come forward to support Malawi,” said Mkwezalamba.
Mkwezalamba said: “IMF informed Malawi that the macroeconomic performance has remained satisfactory and the policy reforms initiated in May 2012 are showing positive results although cashgate has negatively affected the macroeconomic outlook.”
He said: “Government has committed to closely monitor expenditure execution and financing. Government has committed to continued tight monetary policy and fiscal restraint are needed to stabilise the exchange rate.”
But Mabvuto Bamusi, an economic and social commentator, said that despite the release of IMF funds, Malawi cannot be complacent.
“There is a lot of caution that needs to be taken, and one of the cautions is that the government at Lilongwe should avoid being overexcited and pretending that everything is back to normal because we still have scenario where the cost of living is still very high and that, cannot simply being addressed by the $20 million from the donor community,” said Bamusi.
Bamusi also said that unless the Malawi government addresses issues such as drug shortages in hospitals, dilapidated roads, and problems in the procurement of school materials, it still would be a fallacy to talk about economic normality.
He also pointed out that whether or not some of the other donors who withheld aid will release it is still uncertain; just because the IMF has done so does not guarantee anything.
Malawi is only four months away from general elections, and Bamusi thinks it likely many individual donors will take a wait and see approach.