Press Release: Statement by the IMF Mission to Malawi
November 7, 2006Press Release No. 06/242
November 6, 2006
The following statement was issued today in Lilongwe by the International Monetary Fund (IMF) mission to Malawi on the conclusion of discussions with the authorities:
"An IMF mission, headed by Mr. Calvin McDonald, visited Malawi during October 24—November 7, 2006 for discussions on the third review under Malawi's Poverty Reduction and Growth Facility (PRGF) program. The mission held extensive discussions with President Bingu wa Mutharika, the Minister of Finance, the Minister of Trade and Private Sector Development, the Governor of the Reserve Bank, and senior government officials. The mission also met with representatives from parliament, the business and banking community, civil society, and donors.
"The three-year PRGF arrangement, approved by the Executive Board of the IMF on
August 5, 2005, provides SDR38.2 million (about US$55 million) to support the implementation of Malawi's economic reform program. Following the completion by the IMF Executive Board of the second review in August 2006, a total of SDR15.3 million (US$22.7 million) has been disbursed so far under the PRGF arrangement. At the same time, Malawi also reached the HIPC completion point and received additional debt relief from the IMF under the Multilateral Debt Relief Initiative.
"The mission reviewed the performance under the PRGF program and found that most of the program targets were met for end-June 2006. While the targets on government domestic borrowing and discretionary expenditure were exceeded, this largely reflected additional spending on food security toward the end of the food crisis in early 2006. Fiscal performance has been sound through September 2006, facilitated by buoyant tax collections. Temporary factors caused some end-September indicative monetary policy ceilings to be exceeded, but in October, the monetary program was back on-track.
"The discussions also focused on elements of the economic reform agenda following the HIPC completion point. The government recognizes the importance of deepening reforms to strengthen growth prospects for Malawi. Key elements of the envisaged reform agenda for the coming years include: (i) strengthening economic management capacity, in particular through public financial management reforms and the development of an external debt strategy; and (ii) reducing the cost of doing business and improving financial intermediation. The authorities reiterated their commitment to continue to implement sound macroeconomic policies and adhere to fiscal discipline.
"The mission has reached agreement, in principle, with the government on program objectives and policies for the remainder of the fiscal year. This agreement is subject to review and approval by the IMF's Management and Executive Board, which is expected to discuss the staff report on this mission in early 2007."