IMF Executive Board Completes Second and Third Reviews and an Augmentation of Access under Malawi’s ECF Arrangement and Approves US$43.3 Million Disbursement

November 25, 2019

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 sector development.

“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 crop diversification.”

IMF Communications Department


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