The International Monetary Fund (IMF) has said the extent of the coronavirus (Covid-19) shock on Malawi’s economy will likely be sizeable.
IMF resident representative Farayi Gwenhamo was reacting to the recently-announced new Covid-19 measures by President Peter Mutharika.
She said Malawi has joined many other countries who have taken similar steps.
Gwenhamo said: “The magnitude of the macro-economic shock in Malawi caused by the Covid-19 pandemic is likely to be sizeable and is evolving quite fast.
“This calls for the need to recalibrate Malawi’s economic programme supported by the IMF under the Extended Credit Facility [ECF] and to explore other avenues to support Malawi beyond the programme.”
She explained that IMF is currently engaging the authorities on a number of issues, including the recently announced policy measures.
In an apparent move to ease the pain that individuals and organisations as a result of Covid-19 pandemic, the President announced a litany of measures, ranging from a directive to Malawi Energy Regulatory Authority (Mera) to reduce fuel prices and Treasury to reduce salaries of the President and Cabinet ministers by 10 percent for three months.
The President also instructed Malawi Revenue Authority (MRA) to open a voluntary tax compliance window for six months to allow taxpayers with arrears to settle their tax obligations in instalments without penalty.
He also directed Reserve Bank of Malawi (RBM) to implement a win-win arrangement with commercial banks and micro-finance institutions to observe a three-month moratorium on interest and principal repayments for all loans contracted by micro, small and medium enterprises.
IMF mission chief for Malawi Pritha Mitra recently admitted that with the evolution of the Covid-19 outbreak still largely unknown, the economic outlook for Malawi is subject to substantial uncertainty.
Notwithstanding, said over the medium-term, economic growth rate for Malawi may rise further to 6 to 7 percent.
The fund has committed to Malawi $150 million (about K110 billion) as a direct response to the fight against Covid-19 crisis.
The funds, which IMF is yet to officially announce, are part of the Catastrophe Containment and Relief Trust (CCRT), Rapid Credit Facility (RCF) as well as balance of payments (BoP) support for Malawi.
Meanwhile, the World Bank and IFC, a member of the World Bank Group, approved an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of Covid-19.