By Jones Gadama
The recent freezing of a $175 million Extended Credit Facility (ECF) agreement between Malawi and the International Monetary Fund (IMF) has sparked mixed reactions.
The All-Africa Conference of Churches (AACC) has hailed the development as a “blessing in disguise,” citing widespread corruption and mismanagement of funds by the government.
Reverend Baxton Maulidi, AACC’s accountability ambassador in Malawi, argues that the IMF funds were largely being plundered by government officials, citing red flags raised by stakeholders on corruption and unwise public expenditures. Maulidi cautions the government against entering into non-concessional borrowing agreements that could exacerbate the country’s debt burden.
However, Secretary to Treasury Betchani Tchereni attributes the lapse of the ECF deal to exogenous shocks that hindered the supply side’s ability to boost revenue and enhance production.
According to Tchereni, the program’s objectives of restoring macroeconomic stability were compromised due to unforeseen circumstances.
The IMF has a history of supporting Malawi’s economic development. In 2013, then-IMF Managing Director Christine Lagarde expressed confidence in Malawi’s potential, highlighting the country’s vulnerability to economic shocks and the need for diversification.
Lagarde emphasized the importance of partnerships between the government, private sector, and international community to drive growth and reduce poverty.¹
The current situation raises questions about the government’s ability to manage its finances effectively.
With a significant portion of the population living below the poverty line, Malawi needs prudent economic management to achieve sustainable growth and development.
As the government navigates this complex economic landscape, Reverend Maulidi’s warning against non-concessional borrowing serves as a timely reminder of the need for fiscal discipline.
The AACC’s stance highlights the importance of transparency and accountability in managing public resources.
Ultimately, the impact of the IMF deal’s freezing on Malawi’s economy remains to be seen.
What is clear, however, is that the country requires a balanced approach to economic management, combining prudent fiscal policies with strategic investments to drive growth and reduce poverty.
