Treasury upbeat as IMF team returns

Fiscal authorities say they are hopeful monetary and fiscal targets and structural reforms are in line with International Monetary Fund (IMF) requirements, whose mission evaluations will take place between March 5 and 15.

Minister of Finance, Economic Planning and Development Goodall Gondwe said this in an interview on Friday ahead of the IMF mission review which will focus on, among others, how government is implementing the 2018/19 National Budget against targets in the three-year $15.4 million (about K11.3 billion) Extended Credit Facility (ECF) programme.

Gondwe (L) and IMF mission chief for Malawi Pritha Mitra during a previous meeting in Lilongwe

IMF mission, which was in the country last October for the first review of ECF, said the country can do better if fiscal authorities maintain a sound macroeconomic environment,  improve debt and public financial management and restore budget balance to correct the previous year’s spending overruns, among other suggestions.

Gondwe, while admitting the year was tough, citing the withdrawal of the K60 billion World Bank budgetary support, said government has been committed to working around meeting the IMF requirements and is hopeful that the outcome of the review will be positive.

He said: “We were mandated to create a conducive environment and spend within the budget to meet the requirements. However, the problem we have is we are not going to receive World Bank budgetary support at a time we thought we are going to have it.

“As such, we will not be including it in our review this time which means we will be short of revenue, but this being the case, we have reduced our expenditures so that it can match with the reduced revenue.”

On the macroeconomic front, Gondwe stressed that government continues to pay attention to the macroeconomic environment.

“We have kept our inflation at a single digit, a feat we have maintained for a while now and further we have also ensured to keep the kwacha in a stable path and kept interest rates on a down trend.”

Malawi’s year-on-year inflation rate is at 8.8 percent as of January and analysts say there are prospects inflation rate will keep trending downwards owing to a good crop output.

IMF resident represent Jack Ree said in a recent interview, the team will, as usual, assess Malawi’s performance during the second half of 2018 relative to the programme’s monetary and fiscal targets and performance benchmarks on structural reforms.

He said it will be a comprehensive exercise, observing that 2019 will be another challenging year.  n

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