Capital hill looting….IMF delays K8bn board meeting
Malawi will have to wait until December to know whether it gets the US$20 million (about from K8 billion) from the International Monetray Fund (IMF) under the Extended Credit Facility (ECF) following the fund’s decision on Monday to postpone a board of executive directors’ meeting in the wake of massive plundering of public resources at the Capital Hill.
IMF Resident Representative Geoffrey Oestreicher confirmed the development in an email response on Tuesday.
“The IMF Board meeting on Malawi was postponed to allow staff time to assess the impact of the recent governance-related events on prospects for achieving the objectives of the ECF-supported programme,” said Oestreicher.
He said an IMF mission team is expected in the country to assess the situation.
“To the extent external financial assistance to the budget is delayed because of these events, the authorities may need to adapt some of their fiscal and monetary policies, and some programme targets may need to be re-set.
“An IMF mission will visit Malawi in about two weeks so that staff can assess the situation, reach understandings on the authorities’ policy responses, and inform the Executive Board in the context of completing the third program review. If all goes well, we expect to have a new Board date in December,” said Oestreicher.
IMF Mission Chief to Malawi Tsidi Tsikata told The Daily Times on the sidelines of IMF Annual Meetings in Washington recently that he would report recent wanton plundering of public resources and what government is doing to contain it to the institution’s board of directors for their consideration.
Tsikata said the mission would have to make sure that any concerns that donors have, which may interrupt their business is reported to the board.
“Obviously, we have been talking to the delegation on what is happening in Malawi and the executive board will definitely have to know about what is happening. If it had happened before we finished our report, we would have said something about that in our report.
“We also have to let the board know what development partners are thinking because the programme serves as some kind of a point of reference for other donors. It has a signaling role for other donors and we need to make sure that any concerns that the donors have which might interrupt their assistance to a country is reflected in the report,” said Tsikata.
Following the fiscal mess, one of the country’s development partners, Norway, announced a freeze on budget support until weaknesses in Malawi’s financial management system have been rectified.
Ministry of Finance Spokesperson Nations Msowoya said yesterday that what his ministry knows is that the IMF is still reviewing the government’s performance under the ECF.
“The IMF is expected to complete its review by December 2013. In this regard an IMF Mission is scheduled to arrive in Malawi during the first half of November 2013 to discuss with the government on the forward looking targets,” said Msowoya.
Economics Association of Malawi (Ecama) Executive Director Nelson Mkandawire said the looting at Capital Hill is a sad development as it has a potential of watering down the confidence that donors have in the system.
Mkandawire said delays in disbursing forex inflows into the country will exert pressure on the country’s reserves, thereby accelerating the depreciation of the kwacha, especially now that the country is in the lean period.