Economists have hailed the successful completion of the ninth review under International Monetary Fund (IMF) three-year $143.5 million (K105 billion) Extended Credit Facility (ECF), but cautioned the country “is not out of the woods yet”.
In view of the completion of the review on Wednesday, the executive board of IMF in Washington, USA, has approved disbursement of $26.9 million (about K19 billion), which is basically balance of payment (BoP) to boost the country’s foreign exchange reserves
In a statement on Wednesday, IMF acting chairperson and deputy managing director Mitsuhiro Furusawa said though gross domestic product (GDP) growth is expected to pick up and inflation is also expected to continue declining, the macroeconomic outlook remains challenging, reflecting uncertainties related to adverse weather conditions and policy slippages.
He advised that the near-term policy mix should centre on reducing inflation by combining tight monetary and fiscal policies.
Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira yesterday said this is an indication of international approval of government policies.
“This is important to Malawi and will surely attract private investors. With our foreign exchange reserves at just over three months currently, by July we should be around four months,” he said.
While outlining that the move entails confidence in the economy, economist Alick Nyasulu noted that it is too early to conclude that Malawi is moving in positive direction as waivers were requested by Malawi authorities.
In the recent past, Malawi has undertaken important steps to safeguard and strengthen financial sector given the negative impact of weather-related shocks for the past two years.
In an interview yesterday, Economics Association of Malawi (Ecama) president Henry Kachaje observed that while Malawi remained on track with the IMF programme, cautioned that the outlook remains challenging.
Chancellor College economics professor Ben Kaluwa said the development will unlock doors of opportunity as IMF acts like a referee.
The ECF was aimed at achieving and maintaining macroeconomic stability and
implementation of policies and structural reform to spur growth and
diversify the economy. n