Reserve Bank of Malawi (RBM) Governor Charles Chuka on Tuesday hailed the release of $19.6 million (about K8 billion) by the International Monetary Fund (IMF) following its executive board’s approval of the second review.
Chuka said the funds will spur more donor confidence that the economy is on the right path.
The IMF on Tuesday announced the release of $19.6 million to Malawi under its three-year supported programme, the Extended Credit Facility (ECF), after the executive board met on Monday and approved the completion of the second review of Malawi’s economic performance.
Chuka said in an interview: “This is great news and I am very happy. I hope that the approval will encourage and assure the rest of development partners that their money is in safe hands.”
The RBM boss said he was pleased that the ECF programme is on track despite persisting economic challenges facing the country.
The release of the funds brings together total disbursement so far under the ECF arrangement to $58.7 million out of the programme’s total resources amounting to $156.2 million.
This means that the country is yet to tap the remaining 62 percent of the total resources dangled by the Bretton Woods institution under its ECF arrangement depending on the country’s performance on the agreed targets in the programme.
David Lipton, IMF first deputy managing director and acting chairperson of the fund’s board, said in a statement released yesterday that Malawi’s performance under the Fund-supported programme has been commendable despite a difficult environment.
“The policy reforms have begun to yield positive results, including increased availability of foreign exchange. The government also successfully rolled out its social protection programmes,” said Lipton.
But Lipton advised that continued tight monetary policy and fiscal restraint are needed to contain aggregate demand, stabilise the exchange rate and prices, and boost international reserves.
Currently, the local currency, the kwacha, continues to drastically shed its value to major international currencies since the liberalisation of the exchange regime in May last year, selling at around K420 to the dollar in authorised dealer banks (ADBs) as of on Tuesday.