IMF approves third annual loan

The International Monetary Fund (IMF) has approved its third annual loan arrangement for Malawi amounting to US $27 million. An IMF statement on Friday, received by IRIN, said the loan would be allocated to support the governments programme for 1998­1999. It would also be augmented by an additional US $7 million and be made available in two equal half yearly installments, the first of which will be available on 30 December, 1998. “Malawis economic performance improved substantially during 1995­96 un= der the programme supported by the first Enhanced Structural Adjustment Facility (ESAF) annual arrangement: real GDP growth rebounded to a yearly average of 12 percent, and inflation declined substantially,” the IMF statement said. But, it said, policy implementation had weakened during the second year of the ESAF programme with real GDP growth slowing to 5 percent in 1997. The overall fiscal deficit widened to 11.5 percent of GDP and Malawis currency, the kwacha, came under pressure and experienced several devaluations. Malawi, which joined the IMF in 1965, embarked on an IMF-staff-monitored programme during April-September 1998. The programme targeted real GDP growth of 4.75 percent during 1998 and a significant reduction in the annual inflation rate to 12 percent by the end of the year. It also sought key reforms in the macro-economic and structural areas. The IMF categorises Malawi as a poor country where nominal per capita GNP in 1997 was only US $220, or less than half the sub-Saharan average with income inequality perhaps the highest in Africa. “The various adjustment measures taken so far in 1998 point to a renewed commitment on the part of the Malawian authorities to implement the reforms envisaged under the programme. Malawi should continue to implement its adjustment programs with determination. Timely availability of external budgetary and technical assistance is the key to success,” it said.