The IMF is in discussions with the Malawi delegation in Washington DC to try to get its stalled IMF programme back on track as soon as possible, the fund’s Director for Africa Antoinette Sayeh said on Friday.
The IMF had approved a three-year $79.4 million facility for Malawi two years ago, but the programme was hit by the government’s initial failure to devalue the kwacha and implement public finance management reforms, among other issues.
“We are encouraged by the peaceful transition, the transfer of power from the late Mutharika to Vice-President Joyce Banda…we are also quite encouraged by President Banda’s moves to swiftly repair relations with donors and she also made clear her intentions to get the IMF programme on track,†Sayeh said in Washington.
“We at the IMF express absolute readiness to help as soon as possible and we are already in discussions with the Malawi delegation on a fresh programme,’’ she said.
An IMF programme is crucial for Malawi to unlock millions in budget support that is being withheld by donors.
But Sayeh could not give the time frame of when the Fund can release the much-needed funds to Malawi saying it depends on how quickly Malawi implements reforms.
Sayeh said the IMF was ready to listen to proposals from the Malawian Government.
“The situation has certainly deteriorated in a big way, low earnings from tobacco, donor aid freeze has resulted in the shortage of foreign exchange and fuel…Malawi also has a lot of work to do in restoring its relationships with key donors, which is an important task,†she said.
Malawi, which subsequently devalued the kwacha currency in August, has relied heavily on foreign donor funds. But former colonial ruler Britain, its biggest bilateral donor, suspended aid worth millions in May over a diplomatic spat.
Finance Minister Ken Lipenga said last week that he was optimistic that Malawi will successfully negotiate a programme with the IMF.
Many Western donors have already shown their willingness to support Malawi because of how the transition of power was handled.
Late president Bingu wa Mutharika, 78, who died a fortnight ago after a heart attack, faced street riots by protesters who accused him of ignoring civil liberties and damaging the economy. Twenty anti-government demonstrators were killed by security forces during protests in July.
