Mr. Governor, IMF programme is on track!
When a colleague alerted me to a post on the Facebook page of Reserve Bank of Malawi (RBM) Governor Charles Chuka on the recent International Monetary Fund (IMF) mission report, I could not believe the arguments were coming from a seasoned monetary guru.
The governor accused the fourth estate, as journalists are called, of sensationalism in reporting about the findings of the IMF mission that assessed Malawi’s economic programme with the fund, the Extended Credit Facility (ECF).
Read in part the governor’s post: “It is sad that the stories are deliberately biased and self-serving because they are based on half-truths. The stories are not in our national interest, but to create undue panic.”
That was Friday and I recalled the previous day’s headlines: Malawi Fails IMF Test in The Nation and Malawi’s IMF Programme Off-track in The Daily Times. The headlines summarised findings of the IMF team from Washington DC led by the fund’s mission chief for Malawi, Oral Williams.
Briefly, Williams declared the programme off-track after the country failed to meet set targets for end June 2015.
Besides, the fund proposed several measures to government to revive the programme. These include revision of the 2015/16 National Budget passed earlier in June this year. Economic growth rate was also revised downwards to three percent from earlier projections of 5.5 percent, reflecting a steep decline in the maize harvest in addition to weak private sector investment and consumption.
Malawi’s tough economic environment is there for all to see: high inflation rate, high lending rates, unstable currency. Williams, who was flanked at the high table during the presentation by IMF country representative Geoffrey Oestreicher and Minister of Finance, Economic Planning and Development Goodall Gondwe and Chuka himself, outlined the same.
Gondwe, one of the most honest of politicians I have interviewed and interacted with, said the findings reflected the situation on the ground and that there is need for a “relook and come up with new revenue figures for the budget”.
If Williams was misquoted or the media sensationalised his team’s findings, by now the IMF would have clarified the matter. Ministry of Finance, Economic Planning and Development, too, could have followed suit. It is strange how the two institutions allowed Williams to read out “bogus” findings of a mission prepared by the unpatriotic media. It is also strange how the governor who shared the podium, allowed the “wrong” message to be sent across.
From what the governor posted on Facebook, Malawi’s programme is on track. Someone “hacked” into the IMF mission to let Williams and team read out a wrong statement prepared by a “sensational” media.
The governor is right that the country has survived since donors withdrew their support in November 2013, but at what cost? You call it survival simply because books balance at Capital Hill while millions cannot access medicine in public hospitals? Is it survival when a government cannot recruit medical doctors, nurses and teachers due to lack of funds?
Through its economic programmes such as ECF, IMF seeks to improve the international monetary cooperation to ensure the system does not collapse. It is a regulator, so to speak, just like there are central banks regulating the financial institutions on the domestic scenes.
Poor countries such as Malawi ask IMF for loans to support the outlined targets/measures, notably relating to national budgets and Balance of Payments (BoPs).
Conditionalities for access to the funds include drawing a plan or economic programme explaining how the economic stabilisation will be achieved. Common or compromise ideas are then produced in a letter of intent that outline targets agreed.
IMF then comes periodically to assess, like what they did from September 17 when Williams said it was off-track. Simply put, Malawi failed the IMF test.
