## IMF Executive Board Completes Ninth Review under Malawi’s ECF Arrangement and Approves US$ 26.9 Million Disbursement

_IMF News, June 21, 2017_

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## Bibliographic details
- Published: June 21, 2017

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### Review outcome and disbursement
- The Executive Board completed the ninth and final review of Malawi’s program under the Extended Credit Facility (ECF) arrangement.
- Immediate disbursement: the equivalent of SDR 19.5 million (about US$ 26.9 million).
- Total disbursements under the arrangement to date: the equivalent of SDR 138.8 million (about US$ 191.4 million).
- The Board approved waivers of non-observance of performance criteria related to:
  - net domestic assets of the Reserve Bank of Malawi,
  - net international reserves of the Reserve Bank of Malawi,
  - net domestic borrowing by the central government.

### Program background and financed amounts
- Original ECF arrangement amount: SDR 104.1 million (about US$ 143.5 million), approved on July 23, 2012.
- Augmentation of access: equivalent of SDR 34.7 million (about US$ 47.8 million or 25 percent of quota), approved on June 20, 2016, to respond to the El Niño-induced drought.
- Program objectives: achievement and maintenance of macroeconomic stability; implementation of policies and structural reforms to spur growth, diversify the economy and reduce poverty.

### Economic outlook and risks
- Real GDP Growth is expected to pick up in 2017 due to better prospects for agricultural output, including the maize harvest.
- Annual inflation is expected to remain on a downward trend.
- The macroeconomic outlook remains challenging, reflecting uncertainties related to adverse weather conditions and policy slippages.
- Weather-related shocks context:
  - Two consecutive years of weather-related shocks placed an estimated 40 percent of the population at risk of food insecurity.
  - Relief efforts helped stabilize maize prices and alleviate the adverse impact of the drought on the vulnerable population.

### Policy recommendations and priorities (from Mr. Mitsuhiro Furusawa)
- Near-term policy mix:
  - Center on reducing inflation by combining tight monetary and fiscal policies.
  - Limit expenditures to available resources.
  - Monetary policy should aim at maintaining positive short-term real money market interest rates.
- Public financial management:
  - Strengthen commitment controls.
  - Conduct routine bank reconciliations.
  - Produce regular fiscal reporting to prevent misappropriation of public funds and rebuild trust and confidence in the budget process.
- Fiscal strategy:
  - Implement prudent fiscal policy to safeguard medium-term fiscal and debt sustainability.
  - Improve revenue mobilization and expenditure efficiency to reduce aid dependency and create fiscal space for social spending.
- Financial sector stability:
  - Closely monitor banks’ compliance with prudential norms, including AML/CFT.
  - Increase provisioning.
  - Facilitate rationalization of the banking sector.
  - Strengthen creditor rights and reduce lengthy judicial processes in recovering collateral to help reduce non-performing loans.

*Press Release No. 17/236, June 21, 2017.*

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## References

- [The Executive Board](http://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)
- [Malawi and the IMF](http://www.imf.org/external/country/MWI/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 12/273](https://www.imf.org/external/np/sec/pr/2012/pr12273.htm)
- [Press Release No. 16/295](http://www.imf.org/external/np/sec/pr/2016/pr16295.htm)
- [ECF](https://www.imf.org/external/np/exr/facts/ecf.htm)
- [www.imf.org/Malawi](http://www.imf.org/Malawi)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/06/21/pr17236-imf-executive-board-completes-ninth-review-under-malawi-ecf-arrangement_