Anti-Bakili Muluzi / MALAWI POLITICS TODAY

IMF team in for budget, debt relief talks

by Frank Phiri, 09 March 2006 - 05:56:04

An International Monetary Fund (IMF) mission led by Calvin McDonald arrived on Wednesday to discuss the structure of the 2006/07 budget with government and assess whether Malawi has finally satisfied criteria to qualify for debt relief. Finance Minister Goodall Gondwe yesterday confirmed the mission’s arrival and said it would discuss a host of issues with government over the next three weeks, key of which are debt relief and the budget. “They’ll be looking into our fiscal tables in the last six months ending December [2005], and more closely into our external debt position to see if we can qualify for relief under the Multilateral Debt Relief Initiative (MDRI),” he said. Gondwe said the mission would also assess if Malawi has met performance targets under the Highly Indebted Poor Countries (Hipc) initiative. He said he was optimistic that the country has made the final step into the completion point when its lenders are expected to decide whether or not to cancel her foreign debt stock of US$2.9 billion (about K377 billion). “We should have reached the completion point by now, but this was not possible without an IMF programme. Now we’ve done everything except one thing that relates to the land law,” he said. Gondwe said the law has been drafted and would be tabled in the next sitting of Parliament.. The minister said the review meeting with the Fund’s officials comes after a week of similar discussions with the World Bank in Lilongwe. McDonald’s mission comes a week after the IMF Executive Board in Washington approved a further disbursement of US$7.1 million (over K951 million) to Malawi following what the Fund’s officials said was the country’s impressive performance under the Poverty Reduction and Growth Facility (PRGF) which it won on August 5, 2005. Meanwhile, the Office of the President and Cabinet said yesterday that government would save up to K8 billion annually on attaining her debt relief status. It said in a statement the current government’s tenacity on good governance would ensure that Malawi achieves the 100 percent debt cancellation deal offered to poor countries by the group of the world’s eight industrialised nations at their G8 Summit in Gleneagles, Scotland. “Under the HIPC arrangement, this money will be used to further the policies embarked upon in earlier agreements, which will make life a little easier for everyone,” said the statement. Reuters reported this week that Chad and Malawi had already won approval for debt relief and the process was “in the pipeline”. It said the IMF was in earlier stages of talks on debt relief with Togo, Ivory Coast and Liberia. Malawi and the other five countries missed the December 2005 schedule for 100 percent debt relief from the IMF. The current IMF mission is also expected to tip government on strategies to counter food shortages, which officials say have left an estimated 4.8 million people starving and pushed inflation to 16.7 percent.