The International Monetary Fund (IMF) has poorly rated Malawi on the first review of the Malawi staff monitored program, the first step towards the qualification for extended credit facility (ECF).
IMF says Malawi faced implementation challenges during the first review of the Malawi Staff Monitored Program with Executive Board Involvement based on end-December 2022 targets.
In a statement, IMF's Mika Saito says the challenges are linked to difficulties in reversing course on government spending in the context of a macroeconomic adjustment programme which was adopted late in the fiscal year.
"We had productive discussions with the authorities on Malawi's performance under the first review of the PMB and the next steps. Performance under the PMB based on end-December 2022 targets was mixed.
"This partly reflects implementation challenges linked to the fact that the macroeconomic adjustment programme was put in place late in the fiscal year. It was thus, difficult to reverse course on government spending, and in turn, money growth and foreign exchange reserve accumulation," she says.
Saito said virtual discussions will continue to pin down modifications of the programme targets to reflect negative shocks from Cyclone Freddy which hit Malawi in March causing loss of lives, displacement of families and destruction of infrastructure and crops.
The PMB was approved by IMF Management in November 2022, together with a disbursement of $88.3 million (about K91.4 billion) under the Rapid Credit Facility-Food Shock Window , with a view to support the authorities' efforts in building a track record for an Extended Credit Facility and to improve the lives of Malawians.