IMF says programme still off track

The International Monetary Fund (IMF) on Thursday said its supported programme, the Extended Credit Facility (ECF), is still off track despite the Malawi Government and IMF reaching staff level agreements.

Speaking at a news conference at Capital Hill in Lilongwe, IMF Mission Chief for Malawi Oral Williams, who led the IMF team that visited the country between December 10 and 17, said the country is yet to restore financial controls and accountability in the face of Cashgate.

Said Williams: “Our return was basically to address the outstanding issue of public finance management and see what set of reforms will be implemented to strengthen controls and avoid recurrence of Cashgate.”

He said the mission has now finalised discussions for the fifth and sixth reviews under the ECF arrangement worth about $157 million (about K78.5 billion).

Williams said policies geared towards bringing down inflation to single-digits and increasing reserve coverage over the duration of the programme were central to the discussions with authorities.

He said discussions also focused on incorporating the recommendations of an IMF technical assistance mission on public financial management into the programme that are aimed at restoring financial controls at Capital Hill.

Addressing vulnerabilities in the financial sector that may have emerged in light of recent shocks faced by the economy, Williams said these were central to programme discussions and included measures to strengthen the legal and regulatory frameworks to address sector wide issues.

Williams said based on preliminary findings of the mission, staff will prepare a report, that subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

He said consideration by the Executive Board is expected in early 2015.

On his part, Minister of Finance, Economic Planning and Development Goodall Gondwe said government will continue to work closely with IMF and other development partners to address economic challenges facing the country.