## Statement at the End of an IMF Staff Visit to Malawi

_IMF News, March 14, 2019_

## Source details

**Canonical URL:** [Statement at the End of an IMF Staff Visit to Malawi](https://www.imf.org/en/news/articles/2019/03/13/pr1976-malawi-statement-at-the-end-of-an-imf-staff-visit)

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## Bibliographic details
- Published: March 14, 2019

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### Mission and timeline
- IMF team led by Pritha Mitra, Mission Chief for Malawi, visited Lilongwe from March 5-15, 2019.
- Visit conducted discussions on the second review of the three-year arrangement for Malawi under the Extended Credit Facility (ECF) for SDR78.075 million or about US$112.3 million.
- End-of-mission statement issued March 14, 2019.
- Further discussions to continue in the weeks ahead, including in the context of the IMF’s Spring Meetings during April 12–14 in Washington, D.C.

### Economic outlook and projections
- “Malawi’s economic outlook is favorable.”
- Growth projections:
  - Economic growth is projected to reach about 5 percent in 2019 supported by a rebound in agriculture and some improvement in electricity generation.
  - Over the medium-term, growth could rise further to 6-7 percent, driven by infrastructure projects—including electricity generation—crop diversification, greater access to finance, and an improved business climate.
- Inflation projections:
  - Inflation is expected to ease to around 8 percent at end-2019 and gradually converge to 5 percent over the medium term.

### Program performance (ECF review)
- “Performance under the program has been good.”
- Quantitative performance criteria (QPC) outcomes:
  - All but one of the QPC for end-December were met.
  - The target on the primary balance was missed largely due to front-loading of budgeted expenditures and increases in spending to hold elections.
- Structural benchmarks:
  - Two structural benchmarks were completed on time and most of the rest were met with a short delay.
  - Delays were partly owing to capacity constraints in automating public finance management, which are being addressed.

### Fiscal policy, debt, and public financial management (policy recommendations)
- Fiscal policy should continue to focus on actions to ensure fiscal sustainability.
- Fiscal consolidation should be accelerated in the upcoming fiscal year (FY 2019-20).
- Key reform areas:
  - Improve debt management.
  - Improve public financial management, including:
    - Undertaking regular bank reconciliations.
    - Improving commitment control and cash management.
    - Enhancing the transparency of the budget process.
  - Improve revenue administration.

### Infrastructure, public investment management, and state-owned enterprises
- Authorities have an ambitious plan for infrastructure projects aimed at supporting sustainable growth and poverty reduction.
- Implementation priorities and risks:
  - Ensure financing of infrastructure preserves debt sustainability and contains fiscal risks.
  - Strengthen public investment management through rigorous prioritization of projects and an improved project management framework.
  - Strengthen oversight and monitoring of state-owned enterprises and other parastatals to contain fiscal risks.

### Monetary policy and financial sector
- Monetary policy focus:
  - Continues to focus on maintaining single-digit inflation.
- Banking system resilience:
  - Resilience is improving as reflected in reduced non-performing loans and increased provisioning.
- Credit and access to finance:
  - Credit to the private sector has increased.
  - Structural barriers, such as challenges in property rights, must be addressed to sustainably increase access to finance.
- Reserve Bank of Malawi (RBM) governance and operations:
  - The newly adopted RBM Act has enhanced the RBM’s autonomy.
  - As a next step, the RBM could continue gradually reducing its holdings of government securities.

### Discussions, next steps, and acknowledgements
- Mission and authorities had productive discussions on the second review under the ECF arrangement; discussions will continue in the weeks ahead and at the IMF Spring Meetings (April 12–14).
- The team met with Minister of Finance Goodall Gondwe, Governor of the Reserve Bank of Malawi Dalitso Kabambe, other senior government and RBM officials, a broad range of non-governmental stakeholders, and representatives from Malawi’s development partners.
- The IMF team thanked the authorities for their warm hospitality, strong cooperation, and constructive discussions.

*Statement by IMF staff at the end of a mission, March 14, 2019.*

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## References

- [Malawi and the IMF](http://www.imf.org/external/country/MWI/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 18/157](https://www.imf.org/en/News/Articles/2018/04/30/pr18157-imf-executive-board-approves-under-the-ecf-arrangement-for-malawi)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/03/13/pr1976-malawi-statement-at-the-end-of-an-imf-staff-visit_