The United States Government has issued a stern warning to the government of Malawi that the country risks losing the Extended Credit Facility (ECF) with the International Monetary Fund (IMF) if it does not address some critical issues on fiscal policy.
US Department of Treasury Assistant Secretary for Africa and Middle East, Eric Meyer, told the press at the end of his tour in the country citing ballooning expenditure at a time the country is struggling with revenue collection.
Meyer also mentioned the delayed full implementation of the Integrated Financial Management System (IFMIS), saying this could put Malawi at risk of staying off track with the IMF.
“Additionally, there have been delays in reaching agreements on necessary debt restructuring with some of Malawi’s international creditors, which has been further complicated by deals that Malawi is pursuing with some investors that could undermine Malawi’s agreements with IMF and bilateral creditors,” said Meyer.
The ECF arrangements aim to support the authorities’ commitment to restore macroeconomic stability, build a foundation for increased and sustainable growth, including strengthening resilience to climate-related shocks, and address weaknesses in governance and institutions.
The arrangement is also expected to catalyze grant financing and capital inflows, including foreign direct investment and trade credit.
Meyer held meetings with ministers of foreign affairs and local government, reserve bank governor and ministry of finance officials.
