Malawi pleased over IMF funding resumption IMF decided to release nearly $18.1 million in financial support to Malawi

Malawi

Malawi

BLANTYRE, Malawi (AA) – The government of Malawi has welcomed a decision by the International Monetary Fund (IMF) to resume funding to the landlocked African country.

Finance Minister Goodall Gondwe said the IMF’s immediate disbursement of nearly $18.1 million in financial support showed that Malawi had passed the test on its ability to manage its affairs.

“Of course they have given us criteria, which we need to follow as well,” he told The Anadolu Agency.

He cited a borrowing limit imposed on the banking sector and improved relations between the country’s Reserve Bank and the accountant-general aimed at preventing financial scandals.

“We will make sure we do,” the minister vowed.

The IMF’s executive board on Monday completed the fifth and sixth reviews of Malawi’s economic performance under a program supported by the Extended Credit Facility (ECF), the IMF’s main tool for providing medium-term financial support to low-income countries.

The review allows for the immediate disbursement of about $18.1 million in financial support, bringing total disbursements under the arrangement to $90.3 million.

The IMF also approved a request to extend the ECF scheme by six months, to May 22, 2016.

The three-year ECF arrangement, totaling some $144.4 million, was approved in July of 2012.

Financing under the ECF is at zero interest, with a grace period of five and a half years and a final maturity of ten years.

In the last quarter of 2013, the IMF suspended allocations following revelations that top government officials had looted about $100 million from government coffers in a scandal popularly known as “Cashgate.”

-Budgetary support-

John Kapito, executive director of the Consumer Association of Malawi (CAMA), welcomed the IMF’s decision.

“This is exciting news,” he told AA. “The government must now continue to build on the reforms it has undertaken to strengthen financial management systems to avoid another Cashgate.”

The news has brought hope to many Malawians that the national economy would take a turn for the better.

“I hope drugs will now be available in hospitals, as the government got money from the IMF to buy drugs,” Moffart Banda told AA in Blantyre.

“I also want to see other donors take a cue and start funding the national budget, as it seems our government is broke,” he said.

But Minister Gondwe stressed that the IMF’s announcement would not automatically cause bilateral donors to resume budgetary support to Malawi.

“Budgetary support will not be resumed in the wake of this development because bilateral donors have since changed their policy as to how they would be providing support,” he told AA.

The minister, however, said Malawi expected support from the World Bank, the European Union and the African Development Bank (AfDB) in the 2015/16 financial year.

“In fact, the AfDB is expected to start as early as June. But I don’t want to be euphoric,” Gondwe said.

“We need to continue working hard in terms of how we are managing things,” he insisted. “This includes putting in place structures that will ensure good financial management.”

© 2015, Moses Michael-Phiri. All rights reserved. – The views expressed here are purely those of the author and not necessarily those of the publishers. – Newstime Africa content cannot be reproduced in any form – electronic or print – without prior consent of the Publishers. Copyright infringement will be pursued and perpetrators prosecuted.

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