Malawi, a fragile state with one of the highest incidences of poverty, food insecurity and frequent weather-related shocks, has been severely affected by the pandemic. There are signs of gradual recovery and daily COVID-19 positive cases remain relatively low: real GDP growth in 2021 is projected to pick up to 2.2 percent from 0.9 percent in 2020 helped by a good harvest. However, inflation is expected to increase to 9 percent in 2021 from 8.6 percent in 2020, driven by increases in prices of fuel, fertilizer and food, leaving real per capita growth in the negative region.
International Monetary Fund. Independent Evaluation Office
This evaluation assesses how well IMF-supported programs helped to sustain economic growth while delivering adjustment needed for external viability over the period 2008–19. The evaluation finds that the Fund’s increasing attention to growth in the programs has delivered some positive results. Specifically, it does not find evidence of a consistent bias towards excessive austerity in IMF-supported programs. Indeed, programs have yielded growth benefits relative to a counterfactual of no Fund engagement and boosted post-program growth performance. Notwithstanding these positive findings, program growth outcomes consistently fell short of program projections. Such shortfalls imply less protection of incomes than intended, fuel adjustment fatigue and public opposition to reforms, and jeopardize progress towards external viability. The evaluation examines how different policy instruments were applied to support better growth outcomes while achieving needed adjustment. Fiscal policies typically incorporated growth-friendly measures but with mixed success. Despite some success in promoting reforms and growth, structural conditionalities were of relatively low depth and their potential growth benefits were not fully realized. Use of the exchange rate as a policy tool to support growth and external adjustment during programs was quite limited. Lastly, market debt operations were useful in some cases to restore debt sustainability and renew market access, yet sometimes were too little and too late to deliver the intended benefits. The evaluation concludes that the IMF should seek to further enhance program countries’ capacity to sustain activity while undertaking needed adjustment during the program and to enhance growth prospects beyond the program. Following this conclusion, the report sets out three recommendations aimed at strengthening attention to growth implications of IMF-supported programs, including the social and distributional consequences.
This paper discusses a request from Malawi for a one-year exogenous shocks facility (ESF) arrangement to help it adjust to the large terms-of-trade shock it has suffered. Real GDP growth of Malawi has been high and is expected to remain solid. Inflation, though rising in recent months, is still moderate and is expected to ease over the medium term. The government’s near-term program aims to increase the import coverage of official gross reserves while preserving growth and food security. IMF staff supports the authorities’ request for a one-year high-access ESF arrangement.
This paper discusses key findings of the Sixth and Final Review for Malawi Under the Poverty Reduction and Growth Facility (PRGF). Performance remained generally strong in the period under review. The authorities met most program targets for end-December 2007, and domestic debt fell as a share of GDP, but the domestic borrowing performance criterion was missed. The government aims to meet the 2007/08 domestic borrowing target. Higher fuel and fertilizer prices are putting pressure on international reserves, which are down from an already inadequate level.
This paper assesses Malawi’s 2002 Article IV Consultation and Economic Program for 2002. Malawi’s economic program was guided by the Poverty Reduction Strategy Paper (PRSP) process. The program has been designed in close collaboration with the World Bank and other members of the international community. Malawi’s core economic databases are weak, and the authorities will have to address serious deficiencies more forcefully. Growth performance was disappointing in 2001, with real output likely to have contracted. For 2002, preliminary agricultural production data point at best to a weak economic recovery.
Although Malawi showed good economic performance under the Poverty Reduction and Growth Facility Arrangement, its poverty rate remained high. Executive Directors stressed the need to improve fiscal and monetary stances, and accelerate structural reforms. They appreciated the 10-point plan to improve budget management, and emphasized the need to sustain the soundness of the banking system. Directors agreed for further concessional assistance and urged the authorities to sustain efforts to improve data collection and dissemination, particularly in the area of fiscal statistics.
This paper examines economic developments in Malawi during 1993–97. Following a short recovery in 1993, Malawi’s financial situation deteriorated significantly in early 1994 as increasing problems of expenditure control ahead of its first multiparty elections and administrative problems in revenue collection led a large overall fiscal deficit mainly financed by the banking system. However, Malawi embarked, in early 1995, on an adjustment program designed to reestablish financial stability and set the basis for sustainable economic growth. Since then, the authorities’ efforts have led to a significant transformation of the Malawian economy.
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
This paper discusses developments and issues concerning export credits from the perspective of the economic adjustment process of indebted developing countries. This emphasis is consistent with the principle that officially supported export credit—whether it takes the form of direct official credits or insurance and guarantees on privately funded credits—is an instrument of commercial financing for exports and not a means of aid finance. All creditor governments have a broad range of objectives in using the economic instruments at their disposal to help overcome the adjustment problems of heavily indebted countries, with which important bilateral trade relations are being maintained. In support of an expansion in world trade and notwithstanding the competitive element, export credit insurance and guarantees may have a special role in helping to catalyze private credit flows, especially since such a role coincides with the interest of private lenders to shift away from general purpose balance of payments finance to trade and project finance.