News24

IMF in Malawi to revive stalled ties

2011-12-01 09:05

Blantyre - An International Monetary Fund (IMF) delegation on Wednesday began a weeklong mission to Malawi to revive a stalled programme to cushion the impoverished country against foreign currency shortages.

The team is "expected to help authorities implement key extended credit facility programme commitments", IMF representative Ruby Randall told journalists.

Malawi is battling an economic crisis that saw the country devalue its kwacha currency by 10% against the dollar, amid fuel shortages which led to deadly anti-government protests in July.

Finance Minister Ken Kandodo argued that the fuel shortages had been compounded by an IMF order that all tobacco proceeds - about 70% of Malawi's exports - should be deposited to commercial banks, not the reserve bank.

In June, the IMF said its programme with Malawi was "off-track" as the government had failed to review a $79.4m credit facility meant to cushion the foreign currency shortages.

Randall said the revival of the loan programme would require a subsequent review mission to monitor progress.

Donors, who contribute 40% of the national budget, have halted aid until the country has sorted out its financial situation.

The United States put on hold a $350m grant for Malawi's energy sector out of concern over the authorities' crackdown on street protests.