- Strongly criticised at home, the government of President Bingu wa Mutharika is congratulated abroad for its successful economic policies. An IMF mission to Malawi concluded that the country has met "all quantitative targets" and has seen "progress" in implementing economic reforms.
President Mutharika is an embattled man. Those formerly securing his candidacy for President now seek his impeachment. Malawi's hyperactive Anti-Corruption Bureau (ACB) is closing in on his few allies. Now, it seems, he can only count on support from "his own", the International Monetary Fund (IMF), where Mr Mutharika was employed before becoming Malawi's third President.
His government has managed to repair strained ties with the Fund and donor nations by introducing economic policies totally in line with IMF recommendations. A two-week IMF mission to Malawi, finalised on Monday, confirms this.
The mission, headed by the IMF's Calvin McDonald, was to control whether Malawi was achieving the goals and conditions set forward in an extensive anti-poverty programme, financed with about US$55 million by the Fund. This was the first review of the three-year programme and the test was passed by a wide margin.
The implementation of the anti-poverty programme had been "satisfactory," IMF resident Thomas Baunsgaard said in a statement yesterday. "All quantitative targets have been met through end-September, despite short-term delays in the disbursement of some budget support," he added.
There had also been progress in implementing structural reforms under the programme, the IMF resident said. "Structural reforms" are an integrated part of IMF conditions for so-called anti-poverty programmes and normally include large privatisation schemes, liberalisation of economic and trade policies, cuts in subsidies and more support for businesses.
"Economic growth for 2005, however, has been affected by the agricultural slump and high international oil prices, although a rebound is possible in 2006 depending on next year's harvest," Mr Baunsgaard said. The IMF usually reacts stronger to failure to produce economic growth, unaffected by food crises and world market prices.
According to the IMF, "the paramount challenge in the coming months will be to address the food security emergency." The IMF programme in Malawi was to "continue to accommodate the scaled-up food operations." The government had already taken substantial actions, with the support of donors. "However, given the constraining level of foreign reserves, donor support will remain critical to finance any additional food imports," Mr Baunsgaard said.
"The mission also reviewed the outlook for fiscal and monetary policies for the remainder of 2005/06. Close adherence to the budget approved by parliament is essential to sustain the recent improvement in fiscal policies and prudent monetary policies are required to respond to external shocks," the IMF resident warned.
Given the positive conclusions by the IMF mission, Malawi can now expect a disbursement of about US$ 7 million, the Fund indicated. The mission had met with Malawi's Finance Minister, the Governor of the Reserve Bank, other government officials and representatives from the private sector, organisations and the donor community.
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