Ministry of Finance, Economic Planning and Development says Treasury is expecting the next disbursement from the International Monetary Fund (IMF) to help balance the budget in the last half of the 2019/20 financial year.
The sentiments by Minister of Finance, Economic Planning and Development Joseph Mwanamvekha comes as the IMF Mission Team is in the country for the fourth review of the Extended Credit Facility (ECF).
Mwanamvekha told Business News that Treasury discussed with the IMF to raise the periodical disbursement to Malawi as the $43.3 million (about K32 billion) that was disbursed recently is not enough compared to what IMF is granting other countries in the region.
He said: “Our expectation is that we have done well, we were successful in the third review and we are going to be successful in the fourth review. We have met all the conditions and we believe that at the end of the assessments we will have positive outcomes.
“We expect more resources from the IMF. In our previous discussions, we requested that even the $43.3 million that they gave us was on the lower side compared to what some of our
neighbours are getting.”
Some of the conditions, according to Treasury are financial, structural and technical in nature such as borrowing and prudent spending, among other issues.
According to Mwanamvekha, Treasury has cut expenditure as much as possible and pushed for revenue mobilisation though it has been affected by demonstrations in the aftermath of the May 2019 Tripartite Elections.
If the request receives IMF positive feedback, it will be good news for Treasury at a time when the budget is constrained with deficits.
The anticipation from Treasury also comes months after the IMF revised its quota to Malawi upwards by 33 percent.
On November 22 2019, the IMF executive board completed the second and third reviews of Malawi’s performance under its programme supported by a three-year arrangement under the ECF.
In a statement, IMF said the completion of the reviews qualified Malawi to draw $43.3 million, bringing total disbursements under the arrangement to $73.9 million.
The executive board also approved an augmentation of access under the ECF arrangement of $38.1 million which is 20 percent of quota.
The additional financing will help the authorities meet new balance of payments needs associated with reconstruction following Cyclone Idai that hit Malawi, Mozambique and Zimbabwe last year.
The disbursement brought Malawi’s total access under the current arrangement to $145.3 million, equivalent to 76.25 percent of Malawi’s quota.
The three-year ECF arrangement was approved on April 30 2018 for $107.7 million, equivalent to 56.25 percent of Malawi’s quota in the IMF, to support the country’s economic and financial reforms.
The policy priorities in the ECF arrangement aim to entrench macroeconomic stability, preserve debt sustainability, and advance governance reforms.
In the revised 2019/20 budget, out of K1.84 trillion, K1.4 trillion will be spent on emoluments and Other Recurrent Transactions leaving only K470 billion for development projects.