IMF, World Bank urge banking sector support
The International Monetary Fund (IMF) and World Bank have urged central banks in developing countries, including Malawi, to ensure that coronavirus (Covid-19) policy responses mitigate financial risks.
This is according to a joint policy note issued last week titled Covid-19: Regulatory and Supervisory Implications for the Banking Sector to Central Banks in Developing Countries.
In the publication, the IMF and World Bank argue that national policy measures should continue to target available bank capital and liquidity buffers to support affected borrowers, promote balance sheet transparency, and maintain operational and business continuity of banks.
Reads the note in part: “The banking sector plays a critical role in mitigating the unprecedented macroeconomic and financial shock caused by the pandemic.
“Central banks should, therefore, strive to facilitate public and private support measures.”
In a bid to ease liquidity pressures on banks, Reserve Bank of Malawi (RBM) recently slashed the Liquidity Reserve Requirement and Lombard Rate.
“It also signed an agreement with commercial banks for a three-month debt relief due to financial distress induced by Covid-19 pandemic.
In an interview on Wednesday, RBM spokesperson Mbane Ngwira said the central bank continues to monitor developments in the banking sector in view of emerging risks to ensure banks are providing services to the public.
Chamber of Small and Medium Enterprises executive secretary James Chiutsi told Business News on Thursday that some of its members have benefited from the provision.
