Malawi Passes IMF First Test, Qualifies $174 Million

Malawi has passed the International Monetary Fund’s (IMF) first test as the global lender has reached a staff-level agreement on the second and last review of the Staff Monitored Programme with Executive Board Involvement (PMB).

In view of this, Malawi will be given $174 million (about K195 billion) under a new 48-month financing arrangement under the Extended Credit Facility (ECF).

A statement from the IMF released this morning says the agreement is subject to IMF management and executive board approval scheduled for mid-November this year and receipt of the necessary financing assurances.

The IMF mission chief Mika Saito, who led the staff discussion with Malawian authorities from August 29 to September 30, is quoted in the statement as having said the arrangement is expected to catalyse grant financing and support ongoing efforts to restore a stable and sustainable macroeconomic position.

She said: “The prospective ECF-supported programme will aim at restoring macroeconomic stability, building a foundation for inclusive and sustainable growth, addressing weaknesses in governance and institutions and strengthening resilience to climate-related shocks.

“Fiscal policy will aim at achieving a debt-stabilising primary balance in the medium-term through a package of expenditure adjustment and revenue mobilization measures. The authorities are committed to applying fiscal discipline, containing domestic borrowing, and improving public financial management.”

The IMF team met President Lazarus Chakwera, Minister of Finance and Economic Affairs Sosten Gwengwe, Reserve Bank of Malawi Governor Wilson T. Banda and other senior government officials.