International Monetary Fund (IMF) resident representative Jack Ree has described as a good development for Malawi the IMF Executive Board’s decision to extend the country’s Extended Credit Facility (ECF) economic management programme.
IMF on Monday announced a further extension of the ECF to June 30 2017 to give authorities more time to achieve the programme’s objectives.
In a written response to a questionnaire yesterday, Ree said without the extension, the programme would have automatically expired at the end of December without giving time for completing the ninth and the final review.
He said such a development would have complicated issues and created “potentially very damaging ripple effects on macroeconomic stability, future engagement with the IMF, and the donor relationship”.
Said Ree: “The extension is also a vote of trust on the authorities’ will and ability to take strong actions, including fiscal adjustment, to achieve programme objectives within the first half of 2017 despite the acute macrocosmic challenges caused by the impact of drought.”
The ECF arrangement for Malawi was approved on July 23 2012 and is worth $146.7 million.
Ministry of Finance, Economic Planning and Development officials were not immediately available to react to the development yesterday.
But Minister of Finance, Economic Planning and Development Goodall Gondwe is on record as having confirmed that the IMF has not been able to complete the review because government was yet to resolve the financial aspects of the maize crisis.
Reacting to the development, Ben Kaluwa, an economics professor at the University of Malawi’s Chancellor College, said the extension gives the country a window of opportunity to work on some of its macroeconomic challenges.