Malawi: First Review Under the Staff-Monitored Program with Executive Board Involvement-Press Release; Staff Report; and Statement by the Executive Director for Malawi

IMF Staff Country Reports, July 31, 2023

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Canonical URL: Malawi: First Review Under the Staff-Monitored Program with Executive Board Involvement-Press Release; Staff Report; and Statement by the Executive Director for Malawi

Presents Malawi’s First Review under the Staff-Monitored Program with Executive Board (PMB) Involvement.
Program performance was mixed in light of a series of shocks.
Authorities are taking corrective actions to establish a record of accomplishment of policy implementation, possibly paving the way to an Extended Credit Facility (ECF) arrangement.
Cyclone Freddy has weighed on the outlook for 2023 and led to a lower growth forecast and a higher inflation forecast.
Key downside risks: slippages in program implementation, delays in the ongoing external debt restructuring process, and further external shocks.

Quantitative Targets (QTs), Indicative Targets (ITs), and Structural Benchmarks: mixed performance.
QTs: four out of six end-December and continuous QTs were not met.
ITs: one out of three end-December ITs was not met.
Structural Benchmarks: four out of seven Structural Benchmarks were not met.
Authorities have committed to strong corrective actions to address these implementation shortfalls.

Authorities are taking corrective actions necessary to overcome mixed performance and implementation challenges with the PMB to date.
Objective of corrective actions: demonstrate commitment and capacity to implement the agreed macroeconomic adjustment and reforms needed to support a request for an ECF arrangement.
Priority areas implied by the report’s focus: monitoring of program performance, advancing the external debt restructuring process, and strengthening resilience to external shocks.

Subjects covered: Central banks, Debt service, External debt, Foreign exchange, International organization, International reserves, Monetary policy, Public debt.
Keywords: Debt service, FX swap rollover risk, Global, government Finance Statistics Manual, International reserves, monitoring of program performance, policy track record, price discovery, restructuring strategy.