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Africa > Malawi

You are looking at 1 - 10 of 17 items for :

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Cover Policy Papers
Review of the Policy on Staff-Monitored Program With Executive Board Involvement
International Monetary Fund. Strategy, Policy, & Review Department
,
International Monetary Fund. Finance Dept.
, and
International Monetary Fund. Legal Dept.
This paper reviews the policy on Staff-Monitored Program with Executive Board Involvement (PMB). The PMB plays an important niche role in the Fund’s toolkit in supporting members in circumscribed circumstances, while not supplanting the Staff-Monitored Programs (SMPs) as the primary tool for building or rebuilding a track record towards a Fund arrangement that supports a UCT-quality program. Experience with the PMB is limited to three country cases over the past sixteen months. Further experience would be needed to draw more definitive conclusions in terms of the usefulness of the PMB vis-à-vis alternative instruments and a more parsimonious Fund toolkit. In this context, the PMB is kept in the toolkit, and it will be expected to be reviewed in three years.
Keywords:
Concessional external borrowing; Debt sustainability; External Debt; Monetary policy; Political economy; PMB approval; PMB policy; use criteria; IMF toolkit; transparency policy; Credit; Debt relief; Debt restructuring; Global
Cover IMF Staff Country Reports
Malawi: Second Review Under the Staff-Monitored Program with Executive Board Involvement and Request for an Arrangement Under the Extended Credit Facility-Press Release; Staff Report
International Monetary Fund. African Dept.
This paper discusses Malawi’s Second Review under the Staff-Monitored Program with Executive Board Involvement (PMB) and Request for an Arrangement under the Extended Credit Facility (ECF). Malawi continues to face a challenging macroeconomic environment. Years of unsustainable domestic and external borrowing and the adverse impact of multiple external shocks have resulted in the widening of macroeconomic imbalances, including protracted balance of payment needs. The ECF-supported program will support the authorities’ macroeconomic adjustment and reform agenda aimed at restoring macroeconomic stability, building a foundation for inclusive and sustainable growth, and addressing weaknesses in governance. Further delays in the restructuring of Malawi’s external debt would put at risk macroeconomic stabilization. The risks of moving forward with the ECF arrangement without an agreement in principle between the Malawian authorities and their commercial creditors are significant. IMF staff assesses that the PMB remains on track to achieve its objectives. It supports the authorities’ request for the ECF arrangement, conditional upon receipt of financing assurances.
Keywords:
authorized dealer banks; ECF arrangement; staff appraisal; executive board involvement; financing gap; Debt service; International reserves; Global; Africa; Sub-Saharan Africa
Cover Policy Papers
2021 Special Drawing Rights Allocation—Ex-Post Assessment Report
International Monetary Fund. Strategy, Policy, & Review Department
and
International Monetary Fund. Finance Dept.
This report follows up on the impact of the historic $650 billion 2021 SDR allocation on the global economy, documenting IMF members' use of the allocation and assessing its economic effects. The report finds that the allocation was beneficial for the global economy, helping meet the long-term global need for reserves and supporting market confidence. Members used the allocation mostly to increase international reserve buffers, with some emerging market and developing countries also using it to meet fiscal and external financing needs. While SDR interest costs have increased, members’ capacity to service SDR obligations remains generally adequate. Members’ use of the allocation was mostly in line with Fund advice, and the transparency and accountability of SDR holdings and use has been broadly appropriate, although some gaps remain. Voluntary SDR channeling from economically stronger to more vulnerable members has helped amplify the benefits of the allocation.
Keywords:
SDR channeling; service SDR obligation; SDR tracker; SDR converter; SDR department obligation; SDR interest rate; Freely usable currencies; International reserves; Credit default swap; Currencies; Global
Cover IMF Staff Country Reports
Malawi: First Review Under the Staff-Monitored Program with Executive Board Involvement-Press Release; Staff Report; and Statement by the Executive Director for Malawi
International Monetary Fund. African Dept.
This paper presents Malawi’s First Review under the Staff-Monitored Program with Executive Board (PMB) Involvement. In light of a series of shocks, program performance was mixed. The authorities are taking corrective actions to establish a record of accomplishment of policy implementation, possibly paving the way to an Extended Credit Facility (ECF) arrangement. Cyclone Freddy has weighed on the outlook for 2023 and led to a lower growth forecast and a higher inflation forecast. Key downside risks include slippages in program implementation, delays in the ongoing external debt restructuring process, and further external shocks. Performance on Quantitative Targets (QTs), Indicative Targets (ITs), and Structural Benchmarks was mixed, with four out of six end-December and continuous QTs and one out of three end-December ITs not met. Four out of seven Structural Benchmarks were not met. The authorities have committed to strong corrective actions. The authorities are taking corrective actions necessary to overcome mixed performance and implementation challenges with the PMB to date, allowing them to demonstrate their commitment and capacity to implement the agreed macroeconomic adjustment and reforms to build the policy record of accomplishment needed to support their request for an ECF arrangement.
Keywords:
restructuring strategy; monitoring of program performance; price discovery; policy track record; government Finance Statistics Manual; FX swap rollover risk; Debt service; International reserves; Global
Cover Policy Papers
Review of Experience with The Food Shock Window Under The Rapid Financing Instrument and The Rapid Credit Facility
International Monetary Fund. Finance Dept.
,
International Monetary Fund. Legal Dept.
, and
International Monetary Fund. Strategy, Policy, & Review Department
The Food Shock Window (FSW) under the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI) was approved in September 2022 for 12 months, as a complement to the tools used by the Fund to support the broader international effort to address the global food shock. The Fund has been working closely with partners to provide a coordinated international response to the global food shock, and has contributed through policy advice, technical assistance and lending. Where needed and possible, financial support to countries affected by the global food shock has been delivered by the IMF through multi-year Fund-supported programs The FSW complemented this support in situations where these programs were not feasible or not necessary. As the global food shock and associated balance of payment pressures are expected to continue throughout 2023, the IMF extended the FSW until end-March 2024 to allow the FSW to continue serving as a contingency tool. This extension will also provide sufficient time to observe if the FSW can lapse without limiting the capacity of the Fund to support its members. To ensure adequate borrowing space under the emergency financing limits for those countries that have received support through the FSW, the IMF also extended the additional 25 percent of quota added to the Cumulative Access Limit until end-2026 for countries that have accessed the Food Shock Window through the RFI and until the completion of the 2024/25 PRGT review for those that accessed the Food Shock Window through the RCF.
Keywords:
Cumulative Access Limits; Rapid Financing Instrument; Rapid Credit Facility; Food Insecurity; FSW request; FSW financing; UCT-quality program; FSW relative; FSW experience; FSW resource; Food security; Food prices; Emergency assistance; Balance of payments need; Global
Cover IMF Staff Country Reports
Malawi: Request for Disbursement Under the Rapid Credit Facility and Request for a Staff Monitored Program with Executive Board Involvement-Press Release; Staff Report; and Statement by the Executive Director For Malawi
International Monetary Fund. African Dept.
Foreign exchange shortages together with exchange rate misalignment led to a sharp decline in imports including fuel, fertilizer, medicine, and food. Large fiscal deficits, nearly 10 percent of GDP in FY2021/22, have been largely financed by domestic bank borrowing, resulting in rapid money growth and inflation of 25.9 percent in September 2022. Exchange rate pass-through and hikes in food prices added to inflationary pressure. In addition, food insecurity in Malawi has increased dramatically under the impact of multiple tropical storms, below-average crop production, and increasing prices for food and agricultural inputs such as fertilizer and seeds. The latter are expected to affect the current planting season. As a result of these factors, about 20 percent of the population is projected to be acutely food insecure during the upcoming 2022/23 lean season (October 2022-March 2023), more than twice as many as in 2021.
Keywords:
debt restructuring strategy; financing gap; government subsidy program; debt advisor; track-record building SMP; Debt sustainability; International reserves; Debt service; Africa; Global; Southern Africa
Cover IMF Staff Country Reports
Malawi: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malawi
International Monetary Fund. African Dept.
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.
Keywords:
financing gap; fund advice; private sector investment; governance issue; fiscal policy stance; soft commodity; Debt sustainability; International reserves; Africa; Global; Sub-Saharan Africa
Cover Growth and Adjustment in IMF-Supported Programs
Growth and Adjustment in IMF-Supported Programs
International Monetary Fund. Independent Evaluation Office

Abstract

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.

Keywords:
IMF programs; growth optimism; austerity bias; structural conditionality; debt sustainability; fiscal policy; exchange rate policy; PRGT program; debt operation; IMF support; reviews IMF policy; program objective; Fiscal consolidation; Real effective exchange rates; Structural reforms; Global; Middle East and Central Asia; West Africa; Sub-Saharan Africa; Caribbean; Europe
Cover IMF Working Papers
Understanding Inflation in Malawi: A Quantitative Investigation
Dong Frank Wu
This paper focuses on the role of the pass-through of the exchange rate and policydeterminants in driving inflation. Using linear and nonlinear frameworks, the paper finds: (i) after the switch to a floating exchange rate regime in 2012, nonfood prices not only directly influence headline inflation, but also have an significant impact on food inflation via second round effects; (ii) the pass-through of the exchange rate to headline inflation has jumped from zero to 11 percent under the floating regime, after controlling for other factors; (iii) the improved significance of T-bill rates in shaping inflation flags its importance in Malawi’s monetary framework although the monetary transmission mechanism needs further strengthening; (iv) the increased impact of broad money underscores the necessity for fiscal discipline and central bank independence.
Keywords:
WP; headline inflation; Inflation; Exchange Rate; Pass-through; Regime Switch; food inflation; inflation dynamics; inflation volatility; inflation expectation; T-bill rate; inflation fluctuation; exchange rate expectation; Exchange rate arrangements; Monetary base; Exchange rates; Floating exchange rates; Global
Cover IMF Staff Country Reports
Malawi: Request for an Extension of the Extended Credit Facility Arrangement-Press Release and Staff Report
International Monetary Fund. African Dept.
This paper discusses the Malawi authorities, request for a short extension (June 30, 2016) to their arrangement under the Extended Credit Facility (ECF) that is currently due to expire on May 22, 2016. The extension is needed to provide time for the authorities to implement two prior actions for completing the seventh and eighth reviews. These comprise the reconciliation of government bank accounts for the first half of FY2015/16 and another on preparing a report on the flow and stock of domestic arrears at end-2015.
Keywords:
ISCR; CR; ECF arrangement; program implementation; implementation of policy; Malawi authorities; reconciliation of government bank accounts; International reserves; Structural policies; Structural reforms; Poverty reduction