Friday, September 23, 2011
IMF back in Malawi?
The International Monitory Fund has indicated that is is ready to work with the Malawian Government to bring back the Extended Credit Facility (ECF) (Malawi and the IMF). The ECF is intended to cushion chronic foreign exchange (FOREX) shortages.
In February 2010 the Executive Board of the IMF approved a three-year US$79.4 million arrangement for Malawi under the ECF to support the authorities’ economic program for the period 2010-2012 however in June of this year the IMF was officially declared off track as the country had failed to complete a second year review of the programme due in April 2011 and also following the expulsion of Britain’s envoy in April over a leaked diplomatic cable critical of the President.
Malawi devalued its currency in August in the hope of reviving the IMF programme (Although obviously any outside influence was denied). The IMF had disagreed with Malawi on the value of the kwacha which had been set for many years at 150 to the dollar, saying it was over-valued and discouraged foreign investment to the poor nation which depends on agriculture and donor inflows for economic survival.