Anti-Bakili Muluzi / MALAWI POLITICS TODAY

Malawi Government impresses IMF

by Zainah Liwanda, 22 March 2006 - 05:30:43

The International Monetary Fund (IMF) mission that was in the country to initiate the second review under the Poverty Reduction and Growth Facility (PRGF) programme said Tuesday Malawi has met all set targets. Briefing journalists in Lilongwe, the mission’s head Calvin McDonald said the team would present the findings to the IMF executive board for discussion. “Our assessment is that Malawi has met all the quantitative targets through end December 2005 that were set under the PRGF arrangement and they have met the structural targets, although with some delay, that were also set for end December 2005. “We will present the findings of our review to the executive board of the IMF. The second review will be completed when the executive board has a chance to discuss the findings of the mission sometime,” said McDonald. He said the board is expected to discuss the findings in June, saying after the completion of the discussions it is expected that Malawi would receive another disbursement under the PRGF programme. Earlier, IMF Representative in Malawi Thomas Baunsgaard said the mission reviewed, among others, the outlook for the fiscal and monetary policies for the remainder of the 2005/06. Baunsgaard explained that the mission commended government for scaling up food security operations to meet the increasing humanitarian needs especially at the time when logistical constraints have pushed up costs. He said this will put pressure on the budget and foreign reserves, but said sufficient flexibility in exchange rate policy with additional donor support is needed to reduce the adverse economic impact. “Besides food security operations, close adherence to the budget approved by Parliament is essential to sustain the recent improvement in fiscal policies and prudent monetary exchange rate policies are required to respond to external shocks,” said Baunsgaard. According to Baunsgaard, preliminary indications show that this year’s harvest would be much improved, which he said would have a positive impact on economic prospects. “The authorities should take advantage of this encouraging development to accelerate the implementation of structural reforms, including in public financial management,” he added. The representative said progress has been done in implementing structural reforms, although at a lower pace than anticipated, adding most of them were met with a delay. He said continued improvements in the payroll management and pension reforms will be critical in ensuring fiscal sustainability. Baunsgaard said following the completion by the IMF executive board’s first review in February, a total of $14 million has been disbursed to Malawi under the PRGF programme. Principal Secretary in the Ministry of Finance Radson Mwadiwa explained that the delay in meeting some structural targets was due to administrative problems with the IT department but that was solved. Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive Chancellor Kaferapanjira said the development was good news and that there were high hopes Malawi would qualify for debt relief.