…extends loan facility
The International Monetary Fund (IMF) says it will immediately give Malawi US$76.8 Million (about K54.5 billion) to be used in addressing effects of the drought which hit the country in the 2015/16 growing season.
The Bretton Woods institution has also extended Malawi’s Extended Credit Facility (ECF) arrangement to December this year, a move which will see the country getting a loan of US$49.2 million (K34.9 billion).
In a statement on Monday, the global lender said the extension would give Malawi more time to achieve the original objectives of the programme while the additional financing will help to strengthen the country’s response to the El Niño induced drought which has caused a humanitarian crisis.
IMF Deputy Managing Director Min Zhu said the institution has approved the additional funds because Malawi government has shown commitment to implement reforms and has strengthened the country’s macroeconomic policies.
Min also tipped government on how the country can bring back donors and prevent plunder of public resources.
“Accelerating the implementation of public financial management reforms is indispensable to building trust and confidence in the budget process and ensuring control over fiscal operations. Strong commitment controls, routine bank reconciliations, and regular fiscal reporting remain critical to preventing potential misappropriation of public funds and reviving donor re-engagement.
“The pursuit of prudent fiscal policy is critical to safeguarding medium-term fiscal and debt sustainability. Improved revenue mobilization and expenditure efficiency will reduce aid dependency and create fiscal space for social spending in pursuit of Malawi’s sustainable development goals,” said Min.
The IMF suspended the credit facility arrangement in 2015 following the massive looting of billions of Kwacha from state coffers. But in March this year the global lender announced it would resume programme.