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Mr Gwanda Chakuamba (2003)

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Wednesday, November 23, 2005

IMF team happy with Government's implementation of Malawi’s Poverty Reduction Growth Facility

The International Monetary Fund (IMF) has said it is satisfied with the way government has implemented the Poverty Reduction Growth Facility (PRGF) programme during the first quarter of the financial year.
The team, led by Calvin Mac Donald, said despite short term delays in the disbursement of budget support, government has satisfactorily met all quantitative targets.
Resident Representative of the IMF Thomas Baunsgaard advised government during a press briefing at the Ministry of Finance in Lilongwe Monday to regard the current food shortage as a paramount challenge.
“The government has already taken substantial actions with the support of donors, however given the constraining level of foreign reserves, donor support will remain critical to finance any additional food imports,” said Baunsgaard
The IMF board has so far approved a disbursement of $7 million as the second disbursement in addition to the $4.7 million released in August this year.
When the team was arriving two weeks ago, Acting Secretary to the Treasury Patrick Kabambe indicated that one of the notable issues the team came to discuss with government is the newly introduced contributory pension scheme.
Mac Donald said during Monday’s briefing the IMF has advised government to introduce a database where pensioner’s records will be recorded for future reference.
“Our expert who has already left, provided advice on how to go about the pension reform programme by introducing a database for pensioners. We will be making a follow up on that. We understand this will be the biggest challenge for government but IMF is ready to provide extra funding if needed,” said Mac Donald
The team also held discussions with the donor community, non governmental organisations as well as representatives of the private sector.
“We wanted to get what their views are on the way government is implementing its programmes. In the private sector we met with the Stanbic Bank and National Bank and discussed with them the fundamental economic issues,” said MacDonald
He said the NGOs raised concerns over the way the IMF was handling the issue of food security, while members of the private sector, especially from the commercial banks, complained about difficulties in foreign exchange demand from its customers.
In his response, Kabambe said government is yet to consider the IMF’s advice of introducing a pension database after having a meeting with other stakeholders.
The PRGF is the IMF’s special consideration facility for low-income countries which carries an annual interest rate of 0.5 percent, and is repayable over 10 years with a five-and–half-year grace period on principal payments.
The PRGF is the IMF’s initiative with an equivalent sum of K6.8 billion, which was introduced immediately after the resumption of aid in July this year.

-story by The Nation

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