The International Monetary Fund (IMF) says Malawi has made significant progress in implementing economic reforms that could pave the way for a new programme under its Extended Credit Facility (ECF).
The IMF said its latest mission had reached “considerable progress” with Malawian authorities in designing a package of policies and reforms to support economic recovery.
The mission, led by IMF Malawi chief Justin Tyson, held discussions in Lilongwe from 22 September to 6 October.
It said the government had taken steps to improve fiscal discipline, increase domestic revenue and control spending as part of its National Economic Recovery Plan.
The IMF also pointed to reforms to fuel and sugar pricing, saying these had helped improve the functioning of markets.
“Discussions are advanced on measures to reduce the burden of high public debt,” Mr Tyson said in a statement at the end of the mission.
The proposed ECF programme would support Malawi’s efforts to stabilise the economy while promoting inclusive growth.
The IMF said the programme would focus on continued efforts to reduce the fiscal deficit while protecting social spending, strengthening monetary policy, maintaining financial stability and improving governance.
However, the Fund warned that Malawi continued to face significant economic challenges.
It said economic growth had been affected by climate shocks and weaker demand for tobacco, Malawi’s main export.
The IMF also warned that adverse weather associated with the El Niño weather pattern could affect agricultural production and worsen food insecurity in the short term.
Inflation has been falling in recent months, according to the IMF, largely because of lower food inflation. But it said non-food inflation remained high.
The IMF said the authorities and its team would continue discussions to finalise the package of reforms that could underpin an ECF-supported programme.
The latest mission held meetings with Finance Minister Joseph Mwanamvekha, Reserve Bank of Malawi Governor George Partridge and other senior government officials.
The IMF’s statement is based on preliminary findings from the mission. Any programme under the ECF would still be subject to approval by the IMF’s management and Executive Board.
SOURCE: malawivoice.com
