Malawi fails to meet Extended Credit Facility deadline: IMF approves ‘more time’

The International Monetary Fund (IMF) has approved that Malawi government authorities be granted more time to achieve the Extended Credit Facility (ECF) programme objectives for which it borrowed $146.7 million for (about K108 billion).

Finance Minister Goodall Gondwe and the leader of IMF Oral Williams

Finance Minister Goodall Gondwe and the leader of IMF Oral Williams

The extension, approved on Monday — without an executive Executive Board meeting — will go until June 2017.

In a media statement which Nyasa Times has seen “an earlier extension of the arrangement from June 30, 2016 to December 2016 and an augmentation of access of about US$ 49.2 million  was approved by the Board on June 20, 2016.”

According to the IMF,  the decision was reached at to strengthen the country’s response to the El Niño-induced drought.

Malawi has suffered massive floods and droughts in the last two consecutive years putting at least 8 million people at risk of food insecurity.

The international monetary body hopes that with the extension,  “maintenance of macroeconomic stability and implementation of policies and structural reforms to spur growth, diversify the economy and reduce poverty” will be achieved.

Malawi authorities have also requested for waivers of non-observance of performance criteria related to net domestic borrowing by the government and net international reserves.

The impoverished southern African country, which gets 40 per cent of its budgetary support from external donors including the IMF,  continues to suffer a malaise economic show up.

In the last two years,  the country’s currency — the kwacha — has wobbled due to devaluation with the current inflation rate at 22 per cent.

The three-year ECF arrangement for Malawi  in total amounts to about US$ 144.4 million.

The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.

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