The International Monetary Fund (IMF) executive board has increased Malawi’s funding quota by 33 percent, automatically allowing the country to tap more resources from the Bretton Woods institution through the Extended Credit Facility (ECF).
Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe broke the news on Tuesday in an interview on the sidelines of the 2019 joint annual meetings by the World Bank and IMF in Washington DC, United States of America (USA).
The IMF member country’s quota determines its maximum financial commitment to the IMF, its voting power and has a bearing on its access to IMF financing.
The decision to increase Malawi’s quota by a third, means that the country’s total resource envelop under the ECF arrangement has now jumped to about $146 million, described by Kabambe as significant jump.
“Based on the current ECF, which is worth $112.3 million, it means our quota has now gone up to around $146 million and we think that’s quite a good jump.
“However, we still think that more can be done and that is why we look forward that as we continue to engage the fund, more resources can be made available,” he said.
On his part, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said in most of the meetings with the IMF officials, the Malawi delegation appealed to the IMF board to increase the resources to Malawi, describing the current funds under ECF as quite small and unpredictable.
He said Malawi has also negotiated for a separate augmentation of resources to be considered by the IMF executive board during its meeting on November 22 to help mitigate the impact of Cyclone Idai
When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members of comparable economic size and characteristics.
Malawi, which became a member of the IMF on July 19 1965, has had an IMF quota of special drawing rights (SDR) 138.80 million (about $190 million).
But under the current three-year ECF arrangement approved in April 2018, Malawi was allocated SDR 78.1 million (about $112.3 million) as total resource envelop for the ECF programme.
The increase in the quota comes on the back of IMF’s approval of a reform package earlier this year aimed at enhancing support to low-income countries, which include an increase in access limits and norms within the financing constraints of the self-sustained Poverty Reduction and Growth Strategy as well as expanding the use of blending of concessional and non-concessional financing for low income countries with substantial access to international financial markets.
During the November meeting, the IMF board meeting is expected to conclude the second and third reviews of ECF before disbursing the associated two traches under the programme.