Goodall tips govt on IMF deal
Former minister of Finance Goodall Gondwe says Malawi Government needs to address all outstanding issues ahead of the forthcoming discussions with the International Monetary Fund (IMF) if it is to clinch a new programme.
Gondwe, who previously worked as IMF director for Africa and negotiated such deals for the Malawi Government before, said the silence by government on the deal could be an indication that the set conditionalities were yet to be addressed.
Gondwe said: “The indication I am getting is that there are still issues for Malawi Government to work on before the IMF executive board approves the facility and this is why they are talking of another mission.
“I think the last board meeting raised those issues and government may not be comfortable to share those, but what must give us hope is the fact that there is still more room for discussions.”
Prior to the board meeting, IMF raised two critical issues which would be key for Malawi to clinch the deal. These are submission of a report on misrepresentation of figures to IMF under the previous administration and having a plan for cutting the public debt.
But Gondwe said the misrepresentation of figures was not so much of an issue. He said the critical issue was for the government to present a convincing turnaround strategy and how it will improve public finance management.
He said whatever the case, the administration should work towards getting the IMF deal to improve the state of the economy currently beset with bottlenecks, including high inflation rate, foreign exchange shortage and high levels of wastefulness in public expenditure.
Gondwe said: “If Malawi does not get this, I see trouble. I know government is doing a lot and indeed they must do everything they can to get it. IMF is significant because its approval is what gives other donors confidence. They need to, diplomatically, engage Zambia and learn a few things on how they managed to secure the facility.”
Malawi Government and IMF mission team met in May to discuss a possible Extended Credit Facility (ECF) deal. At the end of the meeting there were indications the IMF Executive Board would meet in July to grant Malawi the lifeline it desperately needs.
But since July, after the board meeting, silence has reigned, leaving many enthusiasts in suspense as to what the future holds for the programme, which id necessary to open more doors for donor support.
Both Minister of Finance and Economic Affairs Sosten Gwengwe and IMF country manager Farai Gwenhamo confirmed there is a planned mission this month to continue discussions.
But the two, in separate interviews, were heavily guarded to explain what the board’s decision was in July and what the fresh talks will focus on.
Gwengwe said: “We are pushing for a mission and we will have a media briefing to share all necessary details next week.”
Gwenhamo said the Ministry of Finance and Economic Affairs was better-placed to share more details on what lies ahead on this deal otherwise all she could do was to confirm of the planned mission.
Malawi is seeking a new ECF after cancelling the previous arrangement in September 2020, thereby forfeiting $70 million (K70 billion). The Nation established that total access under the cancelled three-year ECF was about $145 million, which included the initial resource envelope of about $112.3 million approved in April 2018 plus $40 million under Augmentation of Access approved in November 2019.
