Tag Archives: International Monetary Fund (IMF)

Business, Law and order, Malawi, Regional

African People’s Commission Tribunal convicts IMF, World for inflicting poverty on developing nations

Lloyd M’bwana

LILONGWE-(MaraviPost)-The African People’s Commission of Inquiry (tribunal) has faulted World Bank and International Monetary Fund (IMF)’s colonial economic policies for inflicting poverty on developing nations including Malawi.

The tribunal that sat on June 19 to 20, 2025 in the capital Lilongwe ruled that if IMF and World Bank want to continue operating in Africa must review its economic policies towards meeting the continent’s needs.

The inquiry faulted the two colonial financial institutions’ Structure Adjustment Programmes (SAPs) citing privatisation that meant to sell government companies to private earned-entities arguing that the policy cut jobs to many Africans.

The tribunal observes that IMF and World favour capitalism at the expense of poor nations.

The inquiry therefore agreed that Africa Union (AU) must rise above politic in the formation of the continent’s financial institution replacing World Bank and IMF.

Addressing the news conference after the tribunal made its verdict Advocate Layla Latif said the institutions, established in 1944 when most of Africa remained under colonial rule, cannot adequately serve the continent’s needs.

“They should not exist and we should have them completely replaced by institutions that understand the social, economic, fiscal governance and cultural concerns and the realities of the continent,” Latif said.

She cited Kenya’s House of Fiscal Wisdom as an alternative model, describing it as working toward interest-free credit systems.

Malawi’s civil society activist Mavuto Bamusi said the IMF and World Bank have operated in Malawi for nearly 60 years while poverty persists.

“To a high extent, this has been contributed to the devaluation policies which the IMF has insisted that Malawi should undertake,” Bamusi said.

He noted Malawi’s currency has devalued by more than 75% over three years.

The commission’s judgment found that austerity measures imposed by the institutions “constitute economic violence” and declared the global financial architecture “illegitimate, neo-colonial, irreparably violent.”

The African People’s Commission of Inquiry concluded that the institutions have trapped Africa in economic dependency cycles, undermining development rights and compromising sovereign governance.

African Forum and Network on Debt and Development (AFRODAD) in conjunction with the Malawi Economic Justice Network MEJIN) and other partners organised the Tribunal focusing on the consequences of policies propagated by International Monetary Fund and World Bank.

African International People’s Tribunal attracted delegates from various backgrounds, drawn from over l 10 African countries.

Opinion

The divergent approaches of the IMF and World Bank in Malawi: A comprehensive analysis

Maravi Post Reporter

By Jones Gadama

Malawi has long been a focal point for international financial institutions, particularly the International Monetary Fund (IMF) and the World Bank.

These institutions play crucial roles in shaping the economic landscape of developing nations, providing financial assistance, policy advice, and technical support.

However, their approaches and focus can differ significantly, as evidenced by recent developments in Malawi.

The World Bank’s approval of a $350 million funding package for the Mpatamanga Hydropower Project contrasts sharply with the IMF’s suspension of its Extended Credit Facility due to concerns over fiscal discipline and foreign financial policy.

This analysis delves into the implications of these contrasting actions, exploring the motivations, methodologies, and potential outcomes of the IMF and World Bank’s engagements in Malawi.

The World Bank’s commitment to funding the Mpatamanga Hydropower Project underscores its focus on infrastructure development and energy security in Malawi.

The project aims to enhance the country’s power generation capacity, which is critical for economic growth and development. Malawi has faced chronic energy shortages, hampering industrial growth and limiting access to electricity for households.

By investing in hydropower, the World Bank seeks to address these challenges, promote sustainable energy solutions, and stimulate economic activity. The funding package not only represents a significant financial investment but also reflects the World Bank’s broader strategy of fostering development through infrastructure projects that can have a multiplier effect on the economy.

In contrast, the IMF’s recent suspension of its Extended Credit Facility highlights a more stringent approach focused on macroeconomic stability and fiscal discipline.

The IMF’s decision was driven by concerns over Malawi’s fiscal management and foreign financial policy, which it deemed unsatisfactory. The IMF typically emphasizes the importance of sound economic policies, including budgetary discipline, effective governance, and transparency.

By suspending its support, the IMF aims to signal the need for Malawi to implement necessary reforms to restore fiscal stability and build investor confidence. This approach reflects the IMF’s broader mandate to ensure that countries maintain sustainable economic policies, which is essential for long-term growth and stability.

The differing focuses of the IMF and World Bank in Malawi can be attributed to their distinct mandates and operational philosophies. The World Bank primarily aims to reduce poverty and promote sustainable development through long-term investments in infrastructure, education, and health. Its projects often have a direct impact on the lives of citizens, providing essential services and creating jobs.

The World Bank’s approach is generally more flexible, allowing for a focus on specific projects that can yield immediate benefits for the population.

On the other hand, the IMF’s mandate revolves around maintaining global financial stability and providing short-term financial assistance to countries facing balance of payments crises. The IMF’s approach is often characterized by conditionality, requiring countries to implement specific economic reforms in exchange for financial support.

This can lead to tensions, as the reforms demanded by the IMF may not always align with the immediate needs of the population. In Malawi’s case, the IMF’s suspension of the Extended Credit Facility serves as a wake-up call for the government to prioritize fiscal discipline and sound economic management.

The implications of these contrasting approaches are significant for Malawi’s economic trajectory. The World Bank’s investment in the Mpatamanga Hydropower Project has the potential to transform the energy landscape, providing a reliable power supply that can drive industrialization and economic growth. Improved energy access can enhance productivity, attract foreign investment, and ultimately contribute to poverty reduction.

However, the success of such projects often hinges on the government’s ability to manage resources effectively and ensure that the benefits of increased energy capacity are equitably distributed.

Conversely, the IMF’s suspension of its Extended Credit Facility raises concerns about Malawi’s ability to maintain macroeconomic stability in the face of fiscal challenges. Without the support of the IMF, Malawi may struggle to finance its budget, leading to potential cuts in essential services and social programs.

The suspension also risks undermining investor confidence, as it signals to the market that the government may not be adhering to sound economic principles. This could deter foreign investment, further exacerbating the country’s economic challenges.

The contrasting approaches of the IMF and World Bank also highlight the complexities of international financial assistance. While the World Bank focuses on long-term development goals, the IMF emphasizes the need for immediate fiscal discipline.

This divergence can create challenges for Malawi’s government, which must navigate the demands of both institutions while addressing the pressing needs of its citizens. The government faces the difficult task of implementing necessary reforms to satisfy the IMF while simultaneously pursuing development projects that can improve the quality of life for its population.

Moreover, the relationship between Malawi and these international financial institutions is influenced by broader geopolitical dynamics. The IMF and World Bank operate within a global financial system that often prioritizes the interests of developed nations.

This can lead to a perception that the conditions imposed by the IMF are overly stringent and may not take into account the unique challenges faced by developing countries like Malawi. Critics argue that the IMF’s focus on austerity measures can exacerbate poverty and inequality, undermining the very goals of economic stability and growth.

In light of these challenges, it is essential for Malawi’s government to adopt a balanced approach that addresses the concerns of both the IMF and World Bank. This may involve implementing fiscal reforms that enhance transparency and accountability while simultaneously investing in infrastructure projects that can drive economic growth.

By fostering a collaborative relationship with both institutions, Malawi can work towards achieving its development goals while maintaining macroeconomic stability.

Furthermore, the government should engage in dialogue with civil society and local stakeholders to ensure that development projects align with the needs and priorities of the population. This participatory approach can help build public support for necessary reforms and foster a sense of ownership over development initiatives. By prioritizing inclusive growth and equitable resource distribution, Malawi can create a more resilient economy that is better equipped to withstand external shocks.

The contrasting approaches of the IMF and World Bank in Malawi reflect the complexities of international financial assistance and the challenges faced by developing countries. While the World Bank’s investment in the Mpatamanga Hydropower Project offers a pathway to improved energy access and economic growth, the IMF’s suspension of its Extended Credit Facility underscores the importance of fiscal discipline and sound economic management.

For Malawi to navigate these divergent paths successfully, it must adopt a balanced approach that prioritizes both immediate fiscal stability and long-term development goals. By fostering collaboration with international financial institutions and engaging with local stakeholders, Malawi can work towards a more sustainable and inclusive economic future.

Malawi

Behind the IMF’s polite words lies Malawi’s deepening corruption problem

Burnett Munthali

By Burnett Munthali

Every time the International Monetary Fund (IMF) publishes an assessment of Malawi’s economy, the tone is notably refined—formal, neutral, and filled with technical terms. But within that diplomatic language is a message far graver than it first appears.

In a recent Facebook post, celebrated writer and commentator Onjezani Kenani drew attention to one such phrase in the IMF’s vocabulary: “lack of fiscal discipline.” At a glance, the term sounds clinical, perhaps even manageable. But according to Kenani, this expression cloaks something far more sinister.

onjezani Kenani
Stanley Onjezani Kenani (born in 1976) is a Malawian writer of poetry and short stories

For him, “lack of fiscal discipline” is just a genteel way of saying the government is neck-deep in theft and mismanagement of public funds. It is an elegant phrase hiding the rot of corruption and the reckless plundering of national resources.

This seemingly benign wording, he argues, is how global financial institutions often speak when they want to avoid directly accusing a government of wrongdoing, even when the evidence is clear. It’s a language of diplomacy that, unfortunately, softens the impact of what Malawians live through daily.

In practice, this lack of discipline translates into stolen resources, ghost projects, overpriced procurement, and unexplained wealth among public officials. It means nurses going unpaid, students learning without materials, and patients dying in hospitals that have no medicine.

Kenani’s reflection is a warning: if we don’t learn to decode these institutional euphemisms, we may never truly grasp the extent of the crisis we face. Malawians must learn to read between the lines, to understand that such phrases often mean much more than they say.

He urges citizens to take these words seriously—not in the form they’re presented, but in what they actually represent. We must stop letting polished English fool us into complacency. These diplomatic expressions are not harmless—they are shields that allow leaders to continue looting with little fear of accountability.

While the IMF continues to engage with Malawi, its carefully worded concerns are often twisted by government officials into signs of progress or approval. In reality, they are warnings dressed in velvet—elegant but urgent.

Kenani’s post challenges all of us to demand clarity and honesty in how our situation is reported, both by international partners and our own leaders. It’s a demand for language that reflects the suffering of ordinary Malawians, not language that cushions the powerful.

Ultimately, the term “lack of fiscal discipline” is not just an economic diagnosis—it is a moral indictment. It signals a collapse in responsibility, integrity, and leadership. And unless we recognize this for what it is, Malawi’s path toward recovery will remain blocked.

Now is the time to call things by their true names. Sugarcoating corruption only delays justice. As Kenani rightly points out, all the theft, fraud, and abuse fit under that polished phrase. And we must not let it pass unchallenged.

Law and order, Malawi

Court acquits former Finance Minister Joseph Mwanamveka of IMF’s ECF missreporting case

Maravi Post Author

By Twink Jones Gadama

BLANTYRE-(MaraviPost)-In a significant development, Joseph Mwanamveka, the former finance minister of Malawi, has been cleared of all charges by the High Court in Lilongwe concerning allegations of providing false information to the International Monetary Fund (IMF).

The case, which also involved former Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe and Henry Mathanga, focused on accusations that they had misled the IMF, resulting in the cancellation of a $108 million Extended Credit Facility (ECF) agreement.

After carefully reviewing the evidence, Judge Redson Kapindu concluded on Tuesday that there was insufficient proof to convict Mwanamveka and therefore it would be unrealistic to pursue charges against him.

This ruling comes as a resounding victory for the former finance minister, who maintained his innocence throughout the legal proceedings.

Mwanamveka’s defense argued that he was not employed at the RBM during the period in question, but instead held the position of Minister of Agriculture. This assertion supports the claim that he had no involvement in the alleged offenses related to the false information provided to the IMF.

In his ruling, Judge Kapindu cited the State’s acknowledgment that there was a lack of evidence to convict Mwanamveka.

He noted that the prosecutor (the State) had demonstrated an inability and unwillingness to proceed with the case against the former finance minister, as stipulated in section 247(1) of the Criminal Procedure and Evidence Code.

The allegations made against Mwanamveka, Kabambe, and Mathanga were serious. It was claimed that they knowingly provided the IMF with misleading information, leading to the cancellation of the $108 million ECF agreement.

Such allegations carried significant repercussions, not only for the individuals involved but also for the reputation and economic stability of the nation.

The cancellation of the ECF had adverse effects on Malawi’s economy, as it eliminated the financial support that could have facilitated various developmental projects.

Moreover, the credibility of the nation’s financial institutions and their ability to ensure transparency and accountability came under scrutiny as a result of these allegations.

The ruling by the High Court has far-reaching implications, not only for Mwanamveka but for the broader discussion regarding the handling of financial matters in Malawi.

It highlights the importance of thorough investigations and the need for concrete evidence when pursuing such cases, particularly when the consequences can have a significant impact on the nation’s economy.

The acquittal of Mwanamveka has brought relief to his supporters, who have stood by him throughout the legal ordeal.

They have maintained that he possesses an impeccable reputation and unwavering dedication to serving the nation.

Mwanamveka’s tenure as finance minister was marked by numerous achievements and reforms that played a pivotal role in driving economic growth and stability in Malawi.

His supporters argue that the allegations against Mwanamveka were politically motivated, aiming to tarnish his image and undermine his accomplishments in his position as finance minister.

The acquittal not only vindicates Mwanamveka but also raises questions regarding the legitimacy of the accusations and the motivations behind them.

As the nation moves forward, Malawi must restore faith in its financial institutions and leaders, ensuring that transparency and accountability remain at the forefront of its operations.

The legal case against Mwanamveka, Kabambe, and Mathanga served as a wake-up call, prompting a reevaluation of existing procedures and leading to stricter regulations to prevent similar occurrences in the future.

The case has also shed light on the importance of effective communication and coordination between institutions such as the RBM and the Ministry of Finance.

It emphasizes the need for a seamless flow of accurate information to uphold the credibility of Malawi’s financial sector, ultimately restoring the faith of international partners and investors.

Moving ahead, the State must learn from this case and strengthen its investigative processes to prevent baseless accusations from tarnishing the reputation of individuals and undermining the progress of the nation.

The ruling by the High Court serves as a reminder that justice must prevail in the pursuit of truth, and individuals should not be falsely implicated in cases lacking substantial evidence.

In conclusion, former Finance Minister Joseph Mwanamveka’s acquittal by the High Court in Lilongwe marks a significant moment in Malawi’s legal history.

The ruling validates Mwanamveka’s claims of innocence and highlights the importance of solid evidence in pursuing charges of false information.

This case serves as a reminder of the need for transparency, accountability, and thoroughness in the country’s financial sector, and the role these elements play in ensuring economic stability and growth.

Business, Malawi

Clueless IMF keen to finish Chakwera: Demands heavy taxes on imported vehicles, end AIP

Maravi Post Reporter

LILONGWE-(MaraviPost)-Barely five months after second-hand vehicle importers threatened to take the Malawi Revenue Authority (MRA) to court over its decision to introduce a fixed duty on vehicles, the International Monetary Fund (IMF) seems to add salt to injury.

This is because the Bretton Woods institution has cited a rise in import taxes on vehicles and the updating of the fuel formula among four policy actions it says can help Malawi contain the growing demand for used motor vehicles, which it blames for driving the demand for fuel.

This is contained in its Malawi IMF Country Report No. 23/375 released Wednesday, November 22, 2023.

The IMF demands come barely two weeks after President Lazarus Chakwera’s Tonse Alliance government devalued Malawi Kwacha by 44% without proper and practical measures cushioning Malawians.

DEMANDED TOUGH ACTION—Gopinath

The report was released after, on November 15, 2023, the IMF Executive Board meeting in Washington DC, the United States, approved a four-year Extended Credit Facility programme for Malawi.

According to The Daily Times, the country report, the IMF observes that Japanese second-hand car imports more than doubled from 2,948 cars in 2016 to 7,368 cars in 2022.

It says there may have been both push and pull factors resulting in this rapid growth.

To address the problem, the fund has suggested four policy actions that may be considered such as closing Value Added Tax loopholes and ensuring that all residents pay the full tax on vehicle imports.

“[The others are] (ii) raising import taxes on vehicles to (at least) the regional average; (iii) updating the fuel price formula, including by applying a market-based exchange rate; and (iv) raising fuel taxes.”

It says Malawi is not generating enough through vehicle taxes.

“Prices in Malawi are comparatively low, reflecting lower taxation levels. Like in much of the region, Malawi’s car supply is mainly sourced as secondhand imports from wealthier left-hand drive countries, primarily Japan, but also Australia, Singapore, and Thailand. A few companies provide competitive services that allow African customers to select a vehicle online and have it shipped, imported, and registered in their country,” it indicates.

The IMF adds that there may have been a shift in the export destination from elsewhere towards the African market, which became much more accessible via online sales and settlements via mobile phones.

“The high level of vehicle imports constitutes a drain of scarce foreign exchange earnings but also causes elevated demand for fuel (and political pressures for low and stable fuel prices).

“Mass motorization and the resulting fuel demand constitute a macro-critical risk factor. Furthermore, the relative under-taxation of vehicles and fuel implies a sizeable loss of potential revenue,” the fund says.

It says booming fuel imports are a leading cause of Malawi’s balance of payment pressures and depletion of official foreign reserves.

It says economic fundamentals do not explain this boom but that it appears rather rooted in misaligned policies.

Malawi fuel consumption, according to the fund, has been rising and far exceeds the levels of peer countries.

“Fuel consumption per capita (27.9 litres per capita) also seems to be at the level consumed in much more industrialized countries (e.g., Vietnam) and seems to be much higher than that of neighbouring countries,” the report says.

Over the years, financing fuel imports has become increasingly difficult as Malawi’s external position has deteriorated, it adds.

According to the fund, international banks stopped confirming letters of credit (LC) since the end of 2022.

“Private sector fuel importers (mainly PIL) rely on LC from local banks, promising payment once an exporter ships fuel. Oil suppliers/exporters typically require that local banks’ LCs be confirmed by a international reputable bank. Most local banks cannot get LCs confirmed since the end of 2022 unless the full value of imports is deposited upfront.

“Supplier credit lines have been exhausted. PIL is enjoying an open credit line of $20 million (on a rolling, monthly basis) with one of Malawi’s main oil suppliers. The binding constraint, however, has been the availability of foreign exchange to service the credit line. PIL has not been able to purchase $20 million per month to service the credit line and the supplier requires upfront payment for all further supplies,” the fund says.

Finance Minister Simplex Chithyola Banda was not immediately available for comment.

However, in their Memorandum of Economic and Financial Policies, Chithyola Banda and central bank governor Wilson Banda said the government is committed to delivering on the objectives and targets agreed to under the ECF-supported programme.

When Gita Gopinath, who is the IMF’s First Deputy Managing Director and acting chairperson, visited Malawi this year and had discussions with President Lazarus Chakwera, she said Malawi had to make some tough choices to register economic gains.

About five months ago, when MRA announced new tax measures for second-hand vehicles, there was an uproar, with the Car Dealers Association of Malawi threatening court action.

MRA later rescinded the decision.

Currently, Malawians are grappling with the high cost of living due to the reckless 44% devaluation of the Kwacha.

Source: The Daily Times

Business, Malawi

“It was IMF’ ECF bragging show, nothing for the majority poor!- CDEDI chides Chakwera address

Maravi Post Author

By IOMMIE CHIWALO

BLANTYRE-(MaraviPost)-While from the myopic look of things President Lazarus Chakwera’s last night national address carried some sense, commentators feel it was one of the useless and untimely “bragging shows” that ought not to be tolerated in the twenty-first century.

People are confusing the current approved US$174 Extended Credit Facility (ECF) by the International Monetary Fund (IMF) with the 2006 scenario whereby Malawi had her debts canceled.

Commenting on last night’s address which was delayed for an hour after Chakwera heard of the ECF approval and returned his prepared speech to include the news from the Britton Woods Foundation, Centre for Democracy and Economic Development Initiatives (CDEDI) says it was a bragging show whereby Chakwera stoop so low to brag about the IMF’s Extended Credit Facility (ECF).

CDEDI Executive Director Sylvester Namiwa has since called on Malawians not to celebrate and instead get worried more especially because no country in the world ever developed using aid.

“Sad that in this day and age, our leader would like us to join him in celebrating loans and aid. He is not aware that Simply put what we call aid is someone’s hard-earned money in the form of tax. A serious leader would not maintain the larger-than-life cabinet while shamelessly going around with a begging bowl to donors to feed his people,” says Namiwa.

The CDEDI Executive Director says what Chakwera has done is technically to validate the assertion that he prescribes bitter pills to everyone save for himself and his cronies.

“From his address, it is clear that he would like to maintain the bloated cabinet, crowd of advisors, and his huge salary. He said nothing on what will benefit Malawians from the previous 25 percent devaluation and he heartlessly justified the evil 44 percent meltdown without thinking of the majority poor that have been pushed into poverty overnight,” he said.

CDEDI maintains its stand that Chakwera is a threat to the survival of the very people whom he was supposed to protect in the first place.

“Sadly, his address was the usual rhetoric coupled with blame game typical of a failure,” noted Namiwa.

In a related development, Human Rights Defenders Coalition (HRDC) has said what Chakwera said in his speech inspires hope but asked him to move away from empty rhetorics and implement what he said by walking the talk.

Giving the impression that he is siding with the locals, President Chakwera assured the nation that no one, including himself, will be spared from the pain that Malawians are going through.

He has since announced a suspension of all his international trips up to March next year, citing the next COP 28 in Dubai as an example.

Apart from slashing fuel provisions by half, Chakwera has also suspended all international travels for all cabinet ministers, and senior government officials, as those in statutory corporations.

Business, Malawi

Sigh of relief? IMF nods to Malawi’s ECF

Lloyd M’bwana

LILONGWE-(MaraviPost)-The International Monetary Fund (IMF) on Wednesday, November 15, 2023, approved an Extended Credit Facility (ECF) to Malawi for the next four years.

The approval is expected to unlock Malawi’s budgetary support from donors.

Addressing the nation on Wednesday evening, President Lazarus Chakwera said the ECF approval comes after two years of negotiations with the IMF.

“Under this facility, Malawi will receive an injection of 174 million dollars over the next four years, as well as the resumption of direct budget support from international partners after a 10-year absence because of Cashgate and the financial mismanagement of the previous administration.

“The benefits of this IMF Program are many, but allow me to mention a few critical ones. First, the IMF approval will unlock
foreign direct investments into the country to strengthen productivity,” says Chakwera.

He added, “For example, as a result of our qualification for this IMF Program, several development partners have already lined up several financial facilities that will boost the supply of foreign exchange in our banks. This includes the World
The bank’s US$60 million Trade Finance Facility will assist domestic banks in supporting the importation of strategic commodities like fertilizer, pharmaceuticals, and industrial raw materials.

“It also includes the World Bank’s 217 million dollar package in response to the fiscal reforms we have implemented, one-third of which will be made available immediately. It also includes 250 million dollars from the World Bank for the Agricultural Commercialization Project, which I will be launching tomorrow, from which 30 million dollars has been set aside for the procurement and distribution of Maize to address the threat of hunger that is looming over several parts of the country”.

Chakwera lauds further, “It also includes our ability to meet all the requirements for 70 million Euros in budget support from the European Union, 30 million dollars in budget support from the African Development Bank, and 6 million dollars in support from the International Fund for Agricultural Development. These injections of foreign investment from our partners over the next four months will greatly enhance our foreign exchange reserves position and provide the macroeconomic stability needed for economic and business growth.

“Apart from the injection of liquidity into our system, the ECF signals to private-sector international investors that Malawi is
back on track with being an investment-friendly economy whose economic and financial reforms have met the strictest
international standards. It is these investments that will power our plans to ramp up production in Agriculture, Tourism, and Mining in line with our ATM Strategy, which includes scaling up the development of Mega Farms for exports, reorganizing and monetizing our minerals for reinvestment, and creating friendly conditions for eco-tourism”.

Chakwera explains, “Additionally, many of you who run your businesses and whose operations have been hampered by acute forex shortages can look forward to better and busier days for your business ahead because the cornerstone of a strong economy is a strong private sector. In other words, the investment and business-friendly environment that this IMF Program will stimulate our economy over the next four months is a fresh opportunity for us to rebuild our economy.

“I am sure you now know that securing this fresh opportunity for rebuilding our economy has come at a painful cost. It has come at the painful cost of enacting reforms in the management of our economy, our financial institutions, and our historic debt. I know that all of you are feeling the agony of the painful corrections we have had to make to give our economy
a fresh start, and I want you to know that I have not made these painful corrections lightly”.

The ECF approval comes after IMF told the Chakwera government to devalue Malawi Kwacha by 44% which is hurting locals as prices of essential goods and services have risen beyond imagination

In August 2020, President Chakwera’s Tonse Alliance government mutually agreed with the IMF to cancel a three-year ECF due to policy change.

Former Finance Minister Felix Mlusu announced the cancellation of the three-year US$107.7 million arrangement approved on April 30, 2018.

Business, Malawi, Opinion, Regional

Of International Monetary Fund’s unpalatable economic policies on Africa

Burnett Munthali

The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member countries.

It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being.

Failures
The IMF fails to encourage economic growth policies

One of the IMF’s goals was to encourage countries to adopt policies that foster economic growth. To accomplish this, the Fund recommends specific economic policies to which the recipient must adhere.

The IMF and Its Discontents
Many of the economic reforms the IMF required as conditions for its lending—fiscal austerity, high-interest rates, trade liberalization, privatization, and open capital markets—have often been counterproductive for target economies and devastating for local populations.

Major Criticism
Opponents of the IMF argue that the loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. This safety net, critics charge, delays needed reforms and creates long-term dependency.

Success
For many countries, the IMF has been the organization to turn to during difficult economic times. Over the years this organization has played a key role in helping countries turn around through the use of economic aid. However, this is only one of the many roles the IMF plays in global economic issues.

Poor Countries
The IMF provides broad support to low-income countries through policy advice, capacity-building activities, and concessional financial support – meaning it is provided at below-market interest rates. Concessional support through the Poverty Reduction and Growth Trust (PRGT) is currently interest-free.

Developing Countries
Developing countries drawing on IMF resources have faced daunting conditions: large fiscal and external deficits, significant debt burdens, high unemployment often combined with chronic inflation, low growth aggravated by structural problems, and weak demand for exports exacerbated by protec- tionism.

IMF financing
The IMF’s resources mainly come from the money that countries pay as their capital subscription (quotas) when they become members. Each member of the IMF is assigned a quota, based broadly on its relative position in the world economy.

Ghana
Ghana has maintained its spot as Africa’s most indebted country to the International Monetary Fund (IMF).

Ghana’s debt to the IMF increased by 35.55% over the period under consideration, per data from the IMF’s Quarterly Finances for July-end 2023.

Business, Malawi

IMF reserves concrete commitment to give Malawi ECF

Lloyd M’bwana

LILONGWE-(MaraviPost)-The International Monetary Fund (IMF) has reserved making any concrete commitment to giving Malawi Extended Credit Facility (ECF).

This follows a conclusion day visit of IMF First Deputy Managing Director Gita Gopinath to Malawi.

Gopinath met President Lazarus Chakwera, Finance Minister Sosten Gwengwe, and Reserve Bank of Malawi (RBM) Governor Wilson Banda at Kamuzu Palace in the capital Lilongwe on Tuesday, September 5, 2023.

At the end of the meeting, no IMF concrete decision was made on Malawi’s ECF instead Gopinath advised Chakwera’s Tonse Alliance administration to “restore macroeconomic stability, which will set the stage for stronger durable growth and poverty reduction. Macroeconomic adjustment and reforms are gaining traction and it would be important to maintain the momentum in the period ahead”.

“I want to thank President Lazarus Chakwera, as well as the Minister of Finance and Economic Affairs, Mr. Sosten Gwengwe, and the Governor of the Reserve Bank, Dr. Wilson Banda for the productive exchange of views and warm hospitality.

“We discussed the economic and developmental prospects for Malawi. I commended the authorities’ efforts under the Staff-Monitored Program with Executive Board Involvement (PMB) to restore macroeconomic stability, which will set the stage for stronger durable growth and poverty reduction. Macroeconomic adjustment and reforms are gaining traction and it would be important to maintain the momentum in the period ahead”, reads IMF’s Gopinath statement.

She added, “We also discussed the policies that would be necessary to solidify the country’s hard-won gains. Securing a debt treatment would be vital for macroeconomic stability and ensure that additional financing could be used to address Malawi’s pressing developmental challenges. Moreover, strengthening fiscal discipline and addressing weaknesses in governance remains essential.

“The close engagement between Malawi’s economic team and IMF staff in the context of the second review of the PMB is welcome, as is the authorities’ request for an arrangement under the Extended Credit Facility. IMF staff and management will continue to offer their strong support to the authorities’ efforts to stabilize the economy.”

Business, Malawi

Chakwera’s Tonse falls from IMF’ ECF grace

Ufulu

…Accused of fiscal indiscipline, forex mismanagement, unstainable debts

LILONGWE-(MaraviPost)-President Lazarus Chakwera’s Tonse Alliance government falls from International Monetary Fund (IMF)’s grace on much awaited Extended credit facility (ECF) approval.

This comes as IMF has poorly rated Malawi on the first review of the Malawi staff monitored program, the first step towards the qualification for ECF.

IMF observes that Malawi faced implementation challenges during the first review of the Malawi Staff Monitored Program with Executive Board Involvement based on end-December 2022 targets.

In a statement, IMF’s Mika Saito says the challenges are linked to difficulties in reversing course on government spending in the context of a macroeconomic adjustment programme which was adopted late in the fiscal year.

“We had productive discussions with the authorities on Malawi’s performance under the first review of the PMB and the next steps. Performance under the PMB based on end-December 2022 targets was mixed.

“This partly reflects implementation challenges linked to the fact that the macroeconomic adjustment programme was put in place late in the fiscal year. It was thus, difficult to reverse course on government spending, and in turn, money growth and foreign exchange reserve accumulation,” she says.

Saito said virtual discussions will continue to pin down modifications of the programme targets to reflect negative shocks from Cyclone Freddy which hit Malawi in March causing loss of lives, displacement of families and destruction of infrastructure and crops.

The PMB was approved by IMF Management in November 2022, together with a disbursement of US$88.3 million (about MK91.4 billion) under the Rapid Credit Facility–Food Shock Window, with a view to support the authorities’ efforts in building a track record for an Extended Credit Facility and to improve the lives of Malawians.

Chakwera’s Tonse has failed to fix the ailing economy three years in power coupled with high inflation, cost of living, shortages of forex, fuel and essential medical drugs.