Prospects high for IMF programme

The IMF and Finance Minister Ken Lipenga have expressed optimism over formal negotiations on a new Extended Credit Facility (ECF) programme for Malawi.

 

An International Monetary Fund (IMF) team, headed by mission chief for Malawi Tsidi Tsikata, is currently in the country for two weeks of negotiations for a successor programme to the ECF, which was suspended last June following disagreements between the fund and government over implementation of some programme agreements.

 

In interviews on Wednesday, both Lipenga and IMF country representative Ruby Randall said they expect a nod to a new programme very soon after IMF signals to other development partners to start disbursing budget support to Lilongwe.

 

“We expect to be able to recommend approval of a new programme to our [IMF] Executive Board soon after the mission returns to Washington in June,” said Randall.

 

Approval of a new ECF programme for Malawi would be crucial as it will help unlock millions of dollars which were withheld by the country’s major donors under the Common Approach to Budget Support (Cabs).

 

She said the team from Washington has been in regular contact with local authorities here since starting the ECF programme discussions in Washington DC during the 2012 Spring meetings of the IMF and the World Bank.

 

Randall said in addition to meeting with government and Reserve Bank of Malawi (RBM) counterparts, the IMF team is expected to engage with other key stakeholders and liaise extensively with the donor community in helping to mobilise resources for Malawi.

 

She said the resources will help support the implementation of government’s comprehensive package of measures, including social protection measures.

 

Lipenga said he is pleased Malawi has re-engaged the IMF and exploring the possibility of negotiating and formulating a totally new ECF.

 

He said the Malawi delegation participated at a Malawi roundtable meeting in Washington DC in April where the country’s traditional development partners expressed their willingness to resume budget support subject to an agreement on the ECF with IMF.

 

Earlier this month, Malawi devalued the kwacha by 49 percent against other major currencies and also removed some foreign exchange restrictions which, according to IMF, will help Malawi fully liberalise the foreign exchange market and improve availability of foreign currencies.