IMF programme to wait for 2012 budget

The International Monetary Fund (IMF) may wait until they see the 2012/2013 budget for Malawi before making a decision on the restoration of its programme with Malawi.

IMF Mission Chief for Malawi Tsidi Tsikata told Reuters news agency in Washington DC on Friday that the budget framework was material in discussions between the fund and Malawi for the revitalization of the off-track Extended Credit Facility with Malawi.

“We should be going back to Malawi in a matter of weeks, at least before the end of May … but what we need is some clarity on the 2012/13 budget and we want to give the authorities some time to do that,” Tsikata said.

“We know how quickly Malawi wants the program but what is important to us is the formation of the budget,” he added.

Malawi has engaged in talks with the IMF for the restoration of the ECF which is necessary to unlock needed aid from Western donors.

Discussions on IMF support were undertaken on the sidelines of meetings of the IMF and World Bank which ended in Washington on Sunday.

The IMF had suspended a three-year $79 million loan after the program went off track when the government failed to devalue its kwacha currency and implement public finance management reforms.

Malawi’s new president, Joyce Banda was sworn in earlier this month after the sudden death of President Bingu wa Mutharika, 78, from a heart attack, raising hopes for a fresh start for the aid-dependent country.

“The president has expressed her desire to work with us to return to a path of macroeconomic reform and we very much look forward to doing that,” IMF’s Director of Africa’s Department Antoinette Sayeh told Reuters on the sidelines of the IMF-World Bank meetings.

Mutharika was blamed for an economic crisis that stemmed from a diplomatic dispute with Britain. After clashing with Mutharika over his economic policies and heavy-handed repression of dissent, Britain and other donors froze aid worth some 40 percent of government spending.

An IMF programme will likely help free up aid from the country western donors estimated at $400 million.

Finance Minister Ken Lipenga, who is heading a Malawi delegation for the meetings in Washington DC, told[I] The Daily Times[/I] before departure that, among other things, he would discuss with officials from the two Bretton Woods institutions the idea of a package and a macro-economic framework that will support the economic recovery of the country.

“We will take advantage of the goodwill generated by the coming into power of her Excellency President Joyce Banda to present a case of urgency on the economic needs of the country,” said Lipenga.

He said apart from the regular meeting, what was even more important for the Malawi delegation would be the side meetings where detailed issues about Malawi will be tabled.

“I have very specific instructions from the President [Joyce Banda] to discuss the country’s relations and prospects of support with the IMF and the World Bank,” said Lipenga.

Lipenga also said he will attend a roundtable discussion on Malawi organised by the World Bank.

“This [World Bank roundtable] reflects the enormous goodwill [on Malawi] generated by the coming into power by her excellency who has place the economy as her number priority,” said Lipenga.