The debate on the suspended four-year $175 million (about K306 billion) Extended Credit Facility (ECF) rages on with main opposition Democratic Progressive Party (DPP) describing the development as the government’s admission of failure.
However, government maintains that the suspension was mutually agreed between it and the IMF.
In its position paper titled Malawi’s Exit from the International Monetary Fund (IMF) Programme: A Reckless betrayal of Economic Responsibility, the party’s directorate of economic affairs says the ECF did not fail Malawi, but rather, government failed the programme and the nation.
Signed by DPP director of economic affairs Ralph Jooma, the party argues that the consequences are far-reaching and devastating.
It says the message to the international community is that Malawi has become an untrustworthy and unstable economic partner.
Reads part of the paper: “The government did not miss the targets because the conditions were punitive. It missed them because of chronic fiscal indiscipline, a lack of transparency and sheer incompetence in managing public resources.
“The suspension of the ECF is the result of persistent failure to meet performance benchmarks and control spending. It is not a choice, it is a consequence.”
IMF resident representative Nelnan Koumtingue told our sister The Nation edition of May 23 2025 that poor fiscal discipline cost Malawi the programme, allaying government’s assertions that the ECF fell off because the fund insisted on conditions that could hurt Malawians.
Koumtingue said IMF’s position remains that Malawi failed to meet benchmarks, emphasising that fiscal discipline has proven difficult to maintain in the current environment due to elevated spending pressures and insufficient revenue mobilisation efforts.
And in its position paper, the former governing party says the situation strips Malawi of a vital anchor that held together the country’s fiscal credibility, monetary discipline and international standing.
The party, which lost power in the court-sanctioned June 23 2020 Fresh Presidential Election, has further argued that the situation shows that the government has failed to lead, reform and to be honest.
“By trying to spin a self-inflicted failure into a triumph of sovereignty, the government is once again insulting the suffering and intelligence of Malawians. Reform is a patriotic duty. It is how responsible governments lay the foundation or sustainable growth, inclusive development and national dignity,” further reads the paper.
As a solution, the party says re-engaging the IMF and development partners with a credible, home-grown recovery programme grounded in transparency, prudence and results, is of paramount importance.
This is apart from attracting investment by enforcing policy consistency and good governance, including ring-fencing social spending to protect the most vulnerable.
While our efforts to talk to Minister of Information and Digitalisation Moses Kunkuyu on Friday proved futile, Minister of Finance Simplex Chithyola Banda on Tuesday said it is time Malawi put to the test its own tailored economic theories to generate enough resources to finance strategic sectors.
Chithyola Banda said this at the start of the Public Affairs Committee’s Sixth All-inclusive Stakeholders’ Conference held at Sunbird Mount Soche in Blantyre.
He was complementing Reserve Bank of Malawi (RBM) Governor MacDonald Mafuta Mwale’s earlier remarks on suspension of the ECF.
In his presentation on the status of Malawi’s economy, Mafuta Mwale said there were other external shocks such as Cyclone Freddy which impacted the programme.
He claimed that this was among the reasons both the Malawi Government and IMF resolved to ‘mutually’ suspend the programme.
Ironically, under the collapsed ECF secured in November 2023, Malawi implemented a series of reforms that Capital Hill said were tough, but necessary to convince development partners of its commitment to reforms to revitalise the country’s ailing economy.
These included raising the policy rate and devaluing the Malawi kwacha first by 25 percent in May 2022 and by a further 44 percent in November 2023.
The IMF said one of the most urgent goals of the ECF was to support authorities’ commitment to restoring macroeconomic stability and creating an environment of low or moderate inflation as well as a stable exchange rate.
Reform efforts under the suspended programme focused on bringing back the country to a sustainable fiscal path, rebuilding external buffers, restoring debt sustainability and external viability while mitigating the effects of El Nino-induced shocks.
Malawi sought the new ECF after cancelling the previous arrangement in September 2020, barely two months after the Tonse Alliance administration led by President Lazarus
