The International Monetary Fund (IMF) Board has completed its assessment of Malawi’s performance on its Extended Credit Facility (ECF), allowing the global lender to make the loan of about K102.7 billion ($140 million) to be disbursed over a three-year period.
Gondwe: IMF nod may see some development partners releasing direct budget support.
The approval follows the IMF boss meeting in Washington DC on Monday April 30 2018 and enables an immediate disbursement of about US$16 million. The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.
IMF board based its decision on the country’s microeconomic stability as a catalyst for economic growth.
“Malawi has shown progress in achieving macroeconomic stabilization following two years of drought, with a rebound in growth and inflation reduced to single digits. However, the fiscal position has deteriorated and the public debt to GDP ratio has risen. Increased debt service pressures have reduced space for needed infrastructure and social spending,” said IMF Deputy Managing Director Tao Zhang, in a statement after the board approval.
The new ECF program will focus to stabilise foreign exchange rates. interest rates, among others for the country to register high levels of growth.
“The medium-term economic outlook is favorable, with private sector activity expected to benefit from better infrastructure and an improved business climate. Progress will depend on the authorities’ strong ownership to support successful implementation of their program.”
Minister of Finance, Goodall Gondwe described the development as “very positive” because it “signals” that the country is on the right track with the economic agenda and “will help push for the much needed return of budget support.”
He said: “We [Malawi] are one of the few countries in the southern African region which has received the [IMF] nod. Among other things, the programme has been looking at government borrowing and management of foreign reserves, areas where we have done well.”
Malawi last ECF program valued at US$156.2 million which was approved in 2012, expired in 2017.
Meanwhile, the IMF has advised government to enhance transparency in its budget process as well as strengthen its medium term budgetary framework and cash management.
IMF representative in Malawi Jack Ree said as things stand now, the possibility of donors bouncing back cannot be ruled out.
Gondwe assured the government with continue its positive strides in the area of public finance management to prevent the misappropriation of public funds and rebuilding trust and confidence in the budget process.
Incessed by revelations of mismanagement of public funds at Capital Hill, widely known as Cashgate in 2013, Malawi’s key donors—who historically contributed about 40 percent to the recurrent budget—withdrew their direct budgetary support worth $150 million, leaving behind a huge fiscal gap.
To date, the donors, some of whom have described the Malawi Government Account Number One as “a leaking budget”, have since been assisting Malawi through off-budget support mechanism.
With the budget session starting on May 4, IMF has since advised Malawi to enhance transparency in the whole budget process as well as strengthen the medium term budgetary framework and cash management.
The ECF programme is aimed at achieving and maintaining macroeconomic stability and implementation of policies and structural reforms to spur growth, diversify the economy and reduce poverty.
The huge appetite of over borrowing by government must be checked. Don’t overburden future generations with repayments when what you did with the loans was only stealing the money into your never satisfied pockets.
Mas ter
6 years ago
Great achievements u are proving to Malawian that government can be run by old mature people long live Goodal and Peter othamangira ku mnsewu ndi PAC adziwe zoona ndi chikondi cha Mulungu pa inu ndi dziko lathu
Hatton
6 years ago
Headteacher you have a point. Malawi lost out during the period 1964 – 1994. Remember during this period Malawi was getting unconditional donor support not on account of good financial management but because of the Cold War between USA and USSR. Tanzania to our north and Mozambique to our east followed the socialist form of government. To keep the devil in Malawi conteted, donors were dishing out aid without conditions. If that aid were put to good use the country would have developed beyond recognition. But alas!!!
Surprise! Most of that money went straight into Kamuzu Banda’s, Tembo’s, Kadzamira’s bank accounts (mostly outside Malawi) and many MCP top guns’ of that day. The money was flowing in like tap water, never turned off.
The corruption was so open – open season all seasons – as MCP and their Kamuzu ruled by fear, almost Hitler style.
Talk about “cashgate”? That was it, starting in the 60s. And there are many people who are alive now, and can attest to this.
MCP – the originators of corruption, and theft of public money.
If these loans were put to proper use we would have long stopped getting more unnecessary ones.
Chilungamo
6 years ago
Another DPP self-delusional ploy to fool innocent Malawians. For over 15yrs now this oldman, year-in year-out, has been giving Malawians false hopes and expectations. IMF this World Bank that, DPP government this, blah! blah!
The reality on the ground talks volumes to the contrary. Economic indicators are at an all time low (we have become the poorest nation on earth, GDP ,etc). Goodall has also presided over the demise of MSB (kupinyolitsa bank to conmen).
Trust this oldman (he is not a baby) at your own peril. He is a DELINQUENT.
SHAME on thieves!!!
Vytowa
6 years ago
More and More loans to feast corrupt politician. Our minister is so happy
Long live Peter Long live Goodal they cheat government can be run by young people never they want to get in to steal
Mwananyanian
6 years ago
It took four years for the new government to sort out the mess that was created by Joisi Banda and her thieving PP. And now, the efforts are bearing fruits, and the fruits are ripening. Ready to eat by next year’s elections. The timing of this assessment and next elections is not a coincidence: clearly, the IMF would have more confidence with the current drivers, than pretenders (MCP), in control. Others (MCP) would have taken this as a stamp of approval; but our current DPP leaders ONLY take it as sign of CONFIDENCE. That shows one big difference in the… Read more »
China
6 years ago
This is not good news to be happy about. Dziko lathu mpaka lero tikudalilabe ma donors. Bolanso Bingu first term adali ndi maganizo oti tiyambe kuziyimila patokha. Not only this money will be misused but palibe chomwe chitaonekepo chosintha. A Malawi ngopusadi
ULEMU WANU MA BIG ULEMU WANU, WORK EXTRA HAD KUTI WANSANJE APHULIKE,TIKUNENA PANO AKATOLIKA, KAJOLOWEKA,CHAKWELA NDI MTAMBO MITU SIKUGWILA.NGATI MUNTHU OFIILA KHUNGU WAFIKA POYAMIKILA NDIYE KUTI MABIG NTCHITO MUKUYIPOTA,NDI GWAPE WINA WANGOTULUKA MUSUPA AMVEKELE TIMATCHA,ZOPUSA!! MUSAFOWOKE MABIG NDIPO WANSANJE AKAKOLOPE LAKE MALAWI.
Hatton
6 years ago
Moya and Hillary Clinton participated in the demons. I am told they had a night of prayer presided by the fallen pastor asking heaven not to allow IMF approve the facility. Yes we are celebrating the loan because it’s only individuals and institutions with good credit rating that get loans. Umafuna zaulere? It is such shallow thinking and babies like you that have created donor fatigue. We are not celebrating loans but improved credit rating yomwe Amai anaiononga. Izi zachitika nthawi yabwino, atangofika kumene kuti azionere okha chifukwa zakumva kupweteketsa mutu. Amai economy munainonga ija komanso kuithawa, APM ndi team… Read more »
The huge appetite of over borrowing by government must be checked. Don’t overburden future generations with repayments when what you did with the loans was only stealing the money into your never satisfied pockets.
Great achievements u are proving to Malawian that government can be run by old mature people long live Goodal and Peter othamangira ku mnsewu ndi PAC adziwe zoona ndi chikondi cha Mulungu pa inu ndi dziko lathu
Headteacher you have a point. Malawi lost out during the period 1964 – 1994. Remember during this period Malawi was getting unconditional donor support not on account of good financial management but because of the Cold War between USA and USSR. Tanzania to our north and Mozambique to our east followed the socialist form of government. To keep the devil in Malawi conteted, donors were dishing out aid without conditions. If that aid were put to good use the country would have developed beyond recognition. But alas!!!
Surprise! Most of that money went straight into Kamuzu Banda’s, Tembo’s, Kadzamira’s bank accounts (mostly outside Malawi) and many MCP top guns’ of that day. The money was flowing in like tap water, never turned off.
The corruption was so open – open season all seasons – as MCP and their Kamuzu ruled by fear, almost Hitler style.
Talk about “cashgate”? That was it, starting in the 60s. And there are many people who are alive now, and can attest to this.
MCP – the originators of corruption, and theft of public money.
If these loans were put to proper use we would have long stopped getting more unnecessary ones.
Another DPP self-delusional ploy to fool innocent Malawians. For over 15yrs now this oldman, year-in year-out, has been giving Malawians false hopes and expectations. IMF this World Bank that, DPP government this, blah! blah!
The reality on the ground talks volumes to the contrary. Economic indicators are at an all time low (we have become the poorest nation on earth, GDP ,etc). Goodall has also presided over the demise of MSB (kupinyolitsa bank to conmen).
Trust this oldman (he is not a baby) at your own peril. He is a DELINQUENT.
SHAME on thieves!!!
More and More loans to feast corrupt politician. Our minister is so happy
Long live Peter Long live Goodal they cheat government can be run by young people never they want to get in to steal
It took four years for the new government to sort out the mess that was created by Joisi Banda and her thieving PP. And now, the efforts are bearing fruits, and the fruits are ripening. Ready to eat by next year’s elections. The timing of this assessment and next elections is not a coincidence: clearly, the IMF would have more confidence with the current drivers, than pretenders (MCP), in control. Others (MCP) would have taken this as a stamp of approval; but our current DPP leaders ONLY take it as sign of CONFIDENCE. That shows one big difference in the… Read more »
This is not good news to be happy about. Dziko lathu mpaka lero tikudalilabe ma donors. Bolanso Bingu first term adali ndi maganizo oti tiyambe kuziyimila patokha. Not only this money will be misused but palibe chomwe chitaonekepo chosintha. A Malawi ngopusadi
ULEMU WANU MA BIG ULEMU WANU, WORK EXTRA HAD KUTI WANSANJE APHULIKE,TIKUNENA PANO AKATOLIKA, KAJOLOWEKA,CHAKWELA NDI MTAMBO MITU SIKUGWILA.NGATI MUNTHU OFIILA KHUNGU WAFIKA POYAMIKILA NDIYE KUTI MABIG NTCHITO MUKUYIPOTA,NDI GWAPE WINA WANGOTULUKA MUSUPA AMVEKELE TIMATCHA,ZOPUSA!! MUSAFOWOKE MABIG NDIPO WANSANJE AKAKOLOPE LAKE MALAWI.
Moya and Hillary Clinton participated in the demons. I am told they had a night of prayer presided by the fallen pastor asking heaven not to allow IMF approve the facility. Yes we are celebrating the loan because it’s only individuals and institutions with good credit rating that get loans. Umafuna zaulere? It is such shallow thinking and babies like you that have created donor fatigue. We are not celebrating loans but improved credit rating yomwe Amai anaiononga. Izi zachitika nthawi yabwino, atangofika kumene kuti azionere okha chifukwa zakumva kupweteketsa mutu. Amai economy munainonga ija komanso kuithawa, APM ndi team… Read more »