Malawi wants renewed access to the International Monetary Fund’s Extended Credit Facility, or ECF, after a two-year halt.
In 2020, the IMF canceled a planned $70 million in loans to Malawi after it came to light that former president Peter Mutharika gave the lender false information about how ECF funds were being used.
The investigations into the matter last year led to the arrest of the former governor of Reserve Bank of Malawi, Dalitso Kabambe, and former finance minister Joseph Mwanamveka.
In a statement released Monday, at the end of a weeklong mission in Malawi aimed at discussing terms of the resumption of the ECF, the IMF said Malawi should first meet certain conditions.
Among those, the IMF asked Malawi to address what it called the country’s unsustainable public debt and to produce a report on allegations the country was giving false information between 2018 and 2020 about the administration of ECF funds.
Sosten Gwengwe, Malawi’s finance minister, told a news conference Monday the government has engaged a debt adviser to help the country address its problem.
“For us to be able to do that, we needed technical expertise,” he said. “And the advice from the Fund was that we get a qualified debt adviser, and that’s why we recruited the Global Sovereign Advisory of France. They have been in the country since last week and they also hope to put together the debt strategy for us in the next one week, maximum, two weeks.”
Gwengwe said a report on alleged falsification of documents on ECF funds is also in its final stages.
“The interim report is out but the substantive report should be coming out mid this month,” he said. “Once these two documents are on the table, then we will re-engage again for a staff level agreement which must be taken to their board, mid-July.”
Economic experts say the ECF is now the only program that can help bail Malawi out of its dire economic straits.
“I am squarely behind the government on this one that we need the ECF,” said Betchani Tchereni, a lecturer in economics at Malawi University of Business and Applied Science. “There might be issues that we have, we are trying to do our best. Yes, we have got some bad apples within the system that may be not helping us well, but the bottom line is that we need those resources. However, way they are going to make those resources available to us as Malawians.”
The IMF says it will make its final decision on the resumption of the ECF to Malawi at its board meeting scheduled for July.