LILONGWE-(MaraviPost) – The Malawi Government through Ministry of Finance and International Monetary Fund (IMF) this week agreed on the implementation of the Extended Credit Facility (ECF) priorities in the next program.
The ECF Malawi program agreements focus on increasing growth and reducing poverty, to consolidate the hard-won macroeconomic stability.
The agreement took centre-stage during a two-day conference held in the capital Lilongwe between the two parties, which took stock of the objectives and performance of the ECF, and the lessons for future engagement.
The development came after a year the IMF’s Executive Board in June 2016 approved an augmentation of access under the arrangement to help Malawi address its worst humanitarian crisis after two consecutive years of drought
That is apart from extending the arrangement through end of June 2017 that was to accommodate the authorities’ efforts in responding to humanitarian crises.
But both Malawi and IMF authorities have since agreed that priorities in the next possible ECF engagement should include reinforcing economic resilience to climate shocks and sustaining public financial management reforms.
The two parties added that any ECF program should seek to improve debt management in view of the large infrastructure needs, safeguarding and strengthening financial sector stability and improving the business environment to foster job creation and inclusive growth.
IMF head of Mission to Malawi Oral Williams told The Maravi Post that delegates agreed that the ECF program broadly achieved its macroeconomic policy stabilization objectives, including reducing inflation, and increasing international reserves, but fell short on achieving sustained and inclusive growth.
Williams observed that although Malawi suffered weather-related shocks, the country should have grown significantly, given the level of external financing that it receives.
The IMF Chief added the country, having attained some level of economic stability recently, is at position where it can address the needs of the people by providing social services to make growth inclusive.
“There were a number of factors that are not favorable to the country that affected 40% of the population. When growth is slow, the ordinary person does not benefit a lot from the economy. Given the scarce resources and significant needs, careful sequencing and prioritization, will be required to address infrastructural gaps and enhance competitiveness.
When inflation is high, it reduces the value of the money. So, this has been one of the priorities in the arrangement. Fortunately, today, its 10.2%, in May 2013, it was 30 percent and this is a key achievement,” says Williams.
In his remarks Finance Minister Goodall Gondwe, also said overall Malawi performed better in the ECF than most of the neighboring countries by achieving key of the IMF targets particularly on macro-economic stability.
Gondwe disclosed that Malawi was considering making a fresh application for the same facility in the near future following the expiry of the program on June 30, 2017.