An International Monetary Fund (IMF) team visited Lilongwe to discuss recent economic and financial developments, as well as economic policies that would underpin the First Review under the Extended Credit Facility (ECF) Arrangement; The team had productive discussions with the authorities. Discussions will continue in the coming weeks to finalize policies to support the completion of the ECF review;Reform efforts will focus on returning to a sustainable fiscal path, rebuilding external buffers, restoring debt sustainability and external viability, while mitigating the El Nino-induced disaster.

An IMF staff team led by Ms. Mika Saito visited Lilongwe from May 12 to 23, 2024 to conduct discussions on the First Review of the ECF-supported program. The program was approved by the IMF Executive Board on November 15, 2023.

At the end of the mission, Ms. Mika Saito issued the following statement:

“The Malawian authorities and the IMF team made substantial progress in discussions on the policies and reforms needed for the completion of the first review of the ECF-supported program. We reached a common understanding on efforts needed to return to a sustainable fiscal adjustment path, rebuild external buffers, and restore debt sustainability. We also have a clear roadmap towards the completion of the review.

“Weather-related shocks continue to impact the Malawian economy, exacerbating food insecurity. The economic outlook for 2024 remains positive but economic growth is now projected at 2 percent reflecting the impact of El Nino on agricultural production and spillovers to the rest of the economy. A successful winter crop would cushion the impact of drought on the agriculture sector.

“The IMF team acknowledged the authorities’ firm commitment to successfully complete the first review of the ECF-supported program. Fiscal discipline remains critical in the face of elevated spending pressures. Rebuilding international reserve buffers and normalizing the foreign exchange market are critically important to facilitate the return of trade credit and reduce vulnerability to external shocks. Addressing weakness in governance and institutions remain important. Successful external debt restructuring is vital for macroeconomic stability.

“Discussions will continue in the coming weeks toward completion of the First ECF Review. The team would like to thank the Malawian authorities and other counterparts for their cooperation, warm hospitality, and constructive discussions.”