On November 22, 2019, the Executive Board of the International Monetary
Fund (IMF) completed the second and third reviews of Malawi’s
performance under its program supported by a three-year arrangement
under the Extended Credit Facility (ECF). Completion of the reviews
enables Malawi to draw the equivalent of SDR 31.55 million (about
US$43.3 million), bringing total disbursements under the arrangement to
SDR 53.85 million (about US $73.9 million).
In completing the reviews, the Executive Board also approved an
augmentation of access under the ECF arrangement of SDR 27.76 million
(about US$38.1 million or 20 percent of quota). The additional
financing will help the authorities meet new balance of payments needs
associated with reconstruction following Cyclone Idai. It will bring
Malawi’s total access under the current arrangement to SDR 105.835
million (about US$145.3 million) equivalent to 76.25 percent of
Malawi’s quota). The Executive Board also approved the authorities’
request for waivers of nonobservance of the performance criteria on the
primary fiscal balance at end-December 2018 and end-June 2019.
The three-year ECF arrangement was approved on April 30, 2018 for SDR
78.075 million (about US$107.7 million, equivalent of 56.25 percent of
Malawi’s quota in the IMF), to support the country’s economic and
financial reforms. The authorities remain committed to the policy
priorities of the ECF arrangement which aim to entrench macroeconomic
stability, preserve debt sustainability, and advance governance reforms
while fostering higher, more inclusive, and resilient growth.
Following the Executive Board discussion on Malawi, the First Deputy
Managing Director Mr. David Lipton, and Acting Chair, stated:
“Despite large reconstruction and balance of payments needs following
Cyclone Idai Malawi’s program performance has been satisfactory.
Program-supported structural reforms advanced, addressing several
important gaps that had previously been identified in public financial
management. All quantitative performance criteria were met except those
on the primary balance, which were missed largely due to faster than
envisaged implementation of rural electrification and development
projects, unexpected spending for disaster relief and to ensure safety
during elections and post-election protests.
“The authorities aim to further entrench macroeconomic stability and
preserve debt sustainability to support higher, more inclusive, and
resilient growth. Fiscal policy will focus on improving revenue
outcomes and spending management to strengthen the fiscal path while
allowing for spending for post-cyclone reconstruction needs and to
strengthen Malawi’s resilience to climate change. Monetary policy will
continue to target inflation. Maintaining exchange rate flexibility and
efforts to further strengthen financial sector resilience will be
important for buffering shocks and supporting broad-based private
“Further implementation of structural reforms and measures to improve
governance and transparency are needed to strengthen economic outcomes.
To this end, enhancing public financial management—through strong cash
management, commitment controls, routine bank reconciliations, and
transparency in the budget process—investment spending efficiency,
monitoring of state-owned enterprises, and debt management will be
critical. In the financial sector, sustainably increasing access to
finance will require addressing structural barriers, such as challenges
with the collateral registry, mobile banking, and property rights.
“The medium-term economic outlook is favorable. Low per capita economic
growth and its resilience to weather shocks is expected to gradually
improve with enhanced electricity generation and irrigation, as well as