Malawi getting on track again - IMF

The International Monetary Fund (IMF) staff team in Malawi has recommended that the body's executive board, which meets in late October, authorise the resumption of aid disbursements to the country. IMF Resident Representative in Malawi Germa Begashaw told IRIN on Tuesday that "disbursements would follow only upon the conclusion of the Board discussion, which is now scheduled to take place on October 20, 2003". The IMF has been withholding disbursements of millions of dollars because it has not been satisfied with Malawi's fiscal management. He explained that "on 21 December 2000 the IMF's Executive Board approved a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) for Malawi for SDR 45.11 million (equivalent to about US $58 million at SDR-US dollar rate which existed then)". Following the Board's decision in December 2000 "the IMF disbursed to Malawi SDR 6.44 million (about US $8 million then). The remaining balance of SDR 38.7 million - this is the one referred to as undisbursed balance of US$ 47 million (valued at old exchange rate) even though the amount is now equivalent to about US $54.7 million at today's SDR/US dollar rate - was to be disbursed semi-annually in six equal tranches following reviews by the IMF to ascertain whether or not Malawi has fulfilled performance criteria agreed at the outset". However, the IMF has made no further disbursements since December 2000 because Malawi has been unable to meet its performance criteria in terms of policy implementation. "Since the beginning of 2001, several IMF missions have visited Malawi and held discussions with government officials relating to the programmed reviews. However, due to slippage in policy implementation, it has not been possible to conclude any of the reviews and therefore, none of the planned tranches could be disbursed up to today," Begashaw said. He added that progress has since been made in getting Malawi on track with the IMF. "Despite the slippage in policy implementation, the IMF staff continued its discussions with the Malawi authorities during the period since December 2000. During early 2003, the IMF staff and the Malawi officials agreed on a programme, to be implemented during January - June 2003, that will bring Malawi back on track," Begashaw noted. IMF missions that held discussions with the government during May-June and July-August this year "observed that Malawi's performance with regard to the track-record programme was broadly satisfactory". "In particular the fiscal targets for end-March and end-June 2003 were largely met. The missions also agreed with the Malawi officials on a macroeconomic framework for fiscal year 2003/04 and structural reforms that would be implemented during the fiscal year," he said. It was due to "this agreement and the satisfactory performance under the track-record programme formed the basis for the IMF staff and management to recommend to the IMF Executive Board [that it] thus authorise the resumption of disbursements," Begashaw concluded.