A team from the International Monetary Fund (IMF), led by Oral Williams, visited Lilongwe December 10–17, 2014 to finalize discussions for the fifth and sixth reviews under Malawi’s Extended Credit Facility (ECF) arrangement.1
At the end of the mission, Mr. Williams issued the following statement:
“The mission and the Malawian authorities reached staff-level agreement on policies that could be supported under the ECF. To this end, policies geared toward bringing inflation down to single digits and increasing reserve coverage over the duration of the program were central to discussions. These encompassed measures to strengthen budget execution—key to ensuring delivery of its objectives—including safeguarding social spending, while maintaining a tight monetary stance to bring inflation to a downward trend.
“In addition, discussions focused on incorporating the recommendations of an IMF technical assistance mission on public financial management into the program. These recommendations are aimed at restoring financial controls and accountability in the face of the “Cashgate” scandal.
“Addressing vulnerabilities in the financial sector that may have emerged in light of recent shocks faced by the economy were central to program discussions and included measures to strengthen the legal and regulatory frameworks to address sector-wide issues.
“The staff-level agreement is subject to review by the IMF’s management and its Executive Board. Consideration by the Executive Board is expected in early 2015.
“The mission held discussions with H.E. President Peter Mutharika, Finance Minister Goodall Gondwe, Reserve Bank of Malawi (RBM) Governor Charles Chuka, Secretary to the Treasury Ronald Mangani, other senior government and RBM officials as well as representatives of Malawi’s development partners.
“The mission expresses its gratitude for the constructive spirit in which discussions were held.”
1 The ECF is the IMF’s main tool for medium-term financial support to low-income countries. It provides for a higher level of access to financing, more concessional terms, enhanced flexibility in program design, and more focused, streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years.
International Monetary Fund (IMF)