The Ministry of Finance, Economic Planning and Development says the design of the next Extended Credit Facility (ECF) with the International Monetary Fund (IMF) will seek to provide an environment for the proper implementation of the next medium-term strategy.
In his address at the stakeholders’ conference on the ECF in Lilongwe yesterday, Secretary to Treasury Ben Botolo said government intends to consolidate growth, harness inflation and improve the external sector.
He said the next programme will also seek to address structural issues and enhance competitiveness.
Said Botolo: “The ECF was initially a three-year programme, but it was extended because of drought and also postponed because of the discovery of Cashgate. This time we are putting all systems together, so we don’t expect a lot of disturbances unless there are weather-related shocks.
“But we are hopeful that with the Bwanje and Shire Valley [irrigation] projects coming up, the economy should be on a right path.”
He also said it is expected that the programme will support the key priority areas of the Malawi Growth and Development Strategy (MGDSIII) directly or indirectly in a bid to increase economic performance and reduce poverty in the country.
Botolo said the engagement with the Fund will be a catalyst for other development partners to do likewise in their respective programmes with government.
Commenting on the performance of the just-ended programme, Minister of Finance, Economic Planning and development Goodall Gondwe said overall, Malawi has performed better in the ECF than most of its neighbouring countries by achieving most of the IMF targets in terms of macro-economic stability.
Speaking earlier at the conference, IMF head of mission to Malawi Oral Williams said although Malawi has suffered weather-related shocks, the country should have grown significantly given the level of external financing that it receives.
He said: “There were a number of factors that were not favourable to the country that affected 40 percent of the population. When growth is low, the ordinary person does not benefit a lot from the economy.
“When inflation is high, it reduces the value of the money. So, this has been one of the priorities in the arrangement. Fortunately, today it is 10.2 percent, in May 2013 it was 30 percent and this is a key achievement.”
Williams also said the country, having attained some level of stability recently, is at a position where it can address the needs of the people by providing social services to make growth inclusive.