IMF stresses need for Malawi’s debt treatment and fiscal discipline

The International Monetary Fund –IMF tells Lilongwe to take action on public debt and strengthen fiscal discipline to achieve macroeconomic stability.

Deputy Managing Director for IMF Gita Gopinath said this after meeting President Lazarus Chakwera, Finance minister Sosten Gwengwe and Governor Wilson Banda in Lilongwe Tuesday.

Gopinath said after the meeting: “I commended the authorities’ efforts under the Staff-Monitored Program with Executive Board Involvement (PMB) to restore macroeconomic stability, which will set the stage for stronger durable growth and poverty reduction.

“Macroeconomic adjustment and reforms are gaining traction and it would be important to maintain the momentum in the period ahead.”

According to Gopinath, also discussed was the policies that would be necessary to solidify the country’s hard-won gains.

She says securing a debt treatment would be vital for macroeconomic stability and ensure that additional financing could be used to address Malawi’s pressing developmental challenges.

“Moreover, strengthening fiscal discipline and addressing weaknesses in governance remain essential,” she said.

Her visit comes ahead of IMF team’s visit next week for further assessment of the country’s progress in the Staff-Monitored Program with Executive Board.

Meanwhile, an associate economics professor at Malawi University of Business and Applied Sciences Betchani Tchereni observes the fund’s position is in harmony with local authorities.

“It’s encouraging to hear such a high ranking official from IMF lauding up some of the efforts authorities are undertaking to bring macroeconomic stability and also to note that she indicates that debt treatment is very important if Malawi is going to indeed get those gains and also that they do realize that without some extra external financing that will be difficult,” Tchereni said.

Concurring with Tchereni, economist Fredrich Changaya describes Gopinath’s visit as a sign that the fund remains open to assist if authorities commit to make right adjustments.

Malawi seriously need the ECF for her balance of payment challenges as the IMF node opens other financing opportunities from both development partners and multilateral lenders.