IMF Executive Board Impressed With Joyce Banda’s Government After Satisfactory Third and Fourth Reviews Under the Extended Credit Facility Arrangement for Malawi and Approves US$ 20Million Disbursement

By Banthu Times Reporter 18/01/2014

The Executive Board of the International Monetary Fund (IMF) has completed the third and fourth reviews of Malawi’s economic performance under a program supported by the Extended Credit Facility (ECF) arrangement after being impressed with the government of Dr Joyce Banda. As a result, the Board’s decision is to release immediate disbursement of an amount equivalent to SDR 13.01 million (about US$ 20million), bringing total disbursements under the arrangement to an amount equivalent to SDR52.06 million (about US$79.8 million).
In completing the reviews, the Board granted waivers for the nonobservance of the continuous performance criterion on new nonconcessional external debt with a maturity of more than one year, and for the nonobservance of the end-September, 2013 performance criteria on government net domestic borrowing and on the net domestic assets of the Reserve Bank of Malawi (RBM.). The Board also approved an extension of the arrangement by four months (to November 2015), and a rephasing of disbursements.

The three-year ECF arrangement for Malawi in the total amount of SDR 104.1 million (about US$156.6 million) was approved on July 23, 2012 (see Press Release 12/273).
Following the Board’s discussion, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:

“Malawi’s macroeconomic performance under the IMF-supported program has remained broadly satisfactory and the policy reforms initiated in May 2012 are showing positive results.The authorities are committed to closely monitor expenditure execution and financing to prevent a recurrence of the fiscal slippage that resulted in a substantial increase in domestic borrowing during the first quarter of the 2013/14 fiscal year. They stand ready to act swiftly with more stringent expenditure restraint and expenditure reprioritization to protect social spending in case downside risks to domestic revenues and external financing materialize.

“Continued tight monetary policy and fiscal restraint that Malawi goverment is pursuing is key to stabilize the exchange rate and reach the target of single digit inflation by end-2014. The Reserve Bank of Malawi is committed to improving its oversight of the financial sector in order to safeguard financial stability.IMF is happy with the government of Joyce Banda.”