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Malawi

Author(s):
International Monetary Fund
Published Date:
December 2006
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I. Introduction

1. This paper presents an assessment of Malawi’s progress in meeting the completion point triggers determined at the decision point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. It seeks approval from the Executive Boards of the International Development Association (IDA) and the International Monetary Fund (IMF) of Malawi’s completion point under the Initiative, including waivers for two of the completion point triggers, revision and topping-up of HIPC assistance.

2. Malawi reached the enhanced HIPC Initiative decision point in December 2000.1 At the decision point, HIPC assistance required to lower Malawi’s net present value (NPV) of debt-to-exports ratio to the HIPC threshold of 150 percent was estimated at US$643 million in NPV terms based on end-1999 debt data. Employing the principle of equal burden sharing, all creditors were expected to reduce the NPV of their claims on Malawi by a common reduction factor of 43.7 percent, after full use of traditional debt-relief mechanisms. For the IDA and the IMF, the resulting commitments amounted to US$331 and US$30 million in NPV terms, respectively. During the interim period between the decision point and completion points, the IMF provided debt relief of US$14 million in NPV terms, while IDA provided relief of US$100 million. Malawi has also benefited from interim assistance granted by the African Development Bank, a number of other smaller multilateral creditors and Paris Club creditors. Total interim assistance to Malawi was about $151 million in NPV terms.2

3. The paper is organized as follows: Section II assesses Malawi’s performance in meeting the requirements for reaching the completion point under the enhanced HIPC initiative, as set out in the decision point document. Section III reviews the status of creditor participation and the delivery of debt relief to Malawi under the enhanced HIPC Initiative and presents the results of the debt sustainability analysis (DSA) based on end-2005 debt data and parameters. This section also assesses the sensitivity of debt indicators to changes in key economic variables. Section IV discusses the case for a topping-up of HIPC assistance. Sections V and VI present the conclusions and issues for discussion by the Boards, respectively.

II. ASSESSMENT OF COMPLIANCE WITH REQUIREMENTS FOR REACHING COMPLETION POINT

4. The decision point document sets out the conditions for reaching the completion point. These include: (i) preparation of a full Poverty Reduction Strategy Paper (PRSP) and its satisfactory implementation for one year; (ii) maintenance of macroeconomic stability and satisfactory implementation of a PRGF-supported program; and (iii) implementation of key structural and governance triggers aimed at strengthening public expenditure management, raising the quality of education, improving health outcomes, fighting HIV/AIDS, strengthening land and credit markets, and creating an effective safety net system. This section assesses the progress in the implementation of these completion point requirements. In addition, it also presents how Malawi has used the budgetary savings from interim relief.

5. In the view of the staffs of IDA and the IMF, Malawi has made satisfactory progress in meeting the conditions for the completion point. All but two of the completion point triggers have been implemented (Box 1). The first of these two triggers required the share of health expenditure to be at least 13 percent of the discretionary recurrent budget. The second trigger required ensuring a yearly enrolment of 6,000 students for teacher training. Based on progress in implementing a broader strategy for raising the quality of education and improving health outcomes, as discussed below, it is recommended that Executive Directors accept the government’s request for granting waivers for the non-observance of these two completion point triggers.

A. Implementation of Poverty Reduction Strategy

6. The preparation of Malawi’s first PRSP in 2001 reflected a highly participatory process that helped in identifying the key development challenges that faced the country and its implementation provided a good basis on which to improve poverty outcomes. The government is now in the process of finalizing its second-generation strategy - the Malawi Growth and Development Strategy (MGDS) which places much greater emphasis on growth as a basis for poverty reduction (Box 2).

Box 1:Summary Assessment of Malawi’s Progress in Implementing the Completion Point Triggers3

Theme and specific triggersAssessment
Implementation of Poverty Reduction Strategies
The full PRSP has been prepared and satisfactorily implemented for one year, as evidenced by the joint staff assessment of the country’s progress report.Implemented. A full PRSP, the Malawi Poverty Reduction Strategy Paper (MPRSP), was prepared by the government and was adopted in April 2002. The first Annual Progress Report in October 2003 indicated that MPRSP implementation was limited. The second APR and JSAN (looking at the period July 2003-June 2004) indicated that MPRSP implementation was still limited. The third APR (looking at the period July 2004-June 2005) and corresponding JSAN (submitted together with this document) show that implementation covering the period 2004–05 was broadly satisfactory.
Macroeconomic Performance
Maintenance of macroeconomic stability and satisfactory implementation of the PRGF-supported program.Implemented. Macroeconomic stability has been maintained since mid-2004, initially under an IMF SMP and then under a PRGF-supported program. A new three year PRGF was approved on August 5, 2005. The first review, completed in February 2006, concluded that performance through to end-September 2005 was satisfactory. The second review, covering performance through end-December 2005, will be discussed by the IMF Executive Board concurrently with this document.
Improving Economic Governance
Separation of fiscal management and audit functions under new legislation.Implemented. Legislation was passed in 2003 to separate the financial management and audit functions of government.
Quarterly expenditure reporting as per format jointly developed by MOF/IDA.Implemented. A format was developed jointly between the Ministry of Finance and the World Bank and pro-poor expenditures are published on the government web site and in the press on a quarterly basis.
Implement Integrated Financial Management Information System (IFMIS) in four pilot ministries.Implemented. Implementation of the system in all ministries commenced in November 2005.
Raising the Quality of Education
Share of education sector expenditure in discretionary recurrent budget of at least 23 percent.Implemented. The sector’s share of discretionary recurrent budget has on average been 29 percent for the period 2001/02 to 2004/05, which is above the required threshold of 23 percent.
Reallocate budgetary resources from secondary school boarding to teaching and learning materials.Implemented. Expenditure on teaching and learning materials has been increasing on a sustained basis (in real terms) over the past few years, and government subvention to secondary school boarding has decreased.
Pre-packaging of donor-supplied primary textbooks for each school and direct supply from the supplier to the schools.Implemented. Since 2002, donor-supplied primary textbooks are pre-packed and directly supplied to schools.
Yearly enrolment of 6,000 students for teacher training and institution of in-service training for primary teachers (at least once each year).Not implemented. (a) Yearly enrolment was 3,000 in 2000. It has not been possible to increase yearly enrolment with the existing number of Teacher Training Colleges (TTCs), and the government has been unable to allocate resources for the construction of additional training institutions. Earlier attempts to increase enrolment through a crash course were not successful. Government has now put in place other measures to increase enrolment (b) Inservice training for primary teachers was institutionalized in 2001 in the form of a continuous professional development program following the phasing out of the Malawi Schools Support Program (MSSP).
Improving Health Outcomes
Recruitment, training and deployment of at least 200 nurse technicians, 50 new medical assistants and 20 radiography technicians per annum.Implemented. Over the implementation period, the sector has on an annual basis been training over 300 nurse technicians, over 60 medical assistants and 20 radiography technicians.
Completion of ʻphase oneʼ reforms of the Central Medical Stores (CMS) and a budget for drugs and medical supplies in line with Better Health for Africa (BHA) standard (US$1.25 per capita).Implemented. (a) With regard to completion of phase one reforms of the CMS, sufficient progress was made which included reviewing the essential drugs list and undertaking the necessary actions towards the transformation of the CMS into an autonomous body. (b) The average budget for drugs and medical supplies over the period is US$1.36 per capita which is above the BHA standard.
Share of health expenditure of at least 13 percent of discretionary recurrent budget.Not Implemented. The sector’s share of discretionary recurrent budget has on average been 12 percent for the period 2001/02 and 2004/05, which is below the required threshold of 13 percent. However, the implementation of the health SWAp has resulted in the share for 2005/06 rising to 18 percent, based on preliminary actual expenditure figures as of July 2006.
Fighting HIV/AIDS
Fully staffed, functional and autonomous National AIDS Control Secretariat.Implemented. National AIDS Commission (NAC) and its secretariat was set up in July 2001 as an autonomous body run and managed by a board of trustees. The secretariat is also fully staffed.
75 percent of all condom outlet points with condoms in stock at any given time.Implemented. There is over 75 percent of condom availability in the groceries, shops, and entertainment clubs, verified through NAC’s monitoring system.
Continuous availability of testing kits at all blood transfusion sites by increasing blood testing kits (each allowing 100 tests to be done) from 1,500 to 2,500.Implemented. The number of blood testing kits increased from 1,500 in 2001 to 4,000 in 2005.
Implementation of an effective Behavior Change Communication Strategy.Implemented. The Behavior Change Interventions (BCI) Strategy was developed in 2003 and is the guiding framework for all HIV/AIDS behavior change interventions in Malawi.
Syndromic Management of sexually transmitted infections (STI) in all Central, District and major CHAM hospitals.Implemented. All central hospitals, district hospitals, major CHAM hospitals and in some districts even health centers are using Syndromic Management of STIs.
Improving Access to Land and Credit
Submission of draft Land Law to parliament.Implemented: A draft Land Law was submitted to parliament on the June 13, 2006.
Approval by cabinet of the ‘Micro-finance Policy.’Implemented. cabinet approved the policy in October 2002.
Increase number of micro-finance clients by 20 percent.Implemented. Statistics covering 20 microfinance institutions and initiatives show an increase of 79 percent in the number of clients between 2000 and December 2005.
Establishment of a monitoring system covering all micro-finance institutions.Implemented. The Reserve Bank of Malawi established a monitoring system covering all microfinance institutions in 2003 under the SADC microfinance observatory initiative.
Creating an Effective Safety Net System
Transform universal starter-pack distribution into a Targeted Input Program (TIP) for 2001/02.Implemented. The universal starter-pack was transformed into a TIP in the year 2000/01 reducing the number of farmers targeted from 2.86 million to 1.5 million. The program has now been changed to operate as a fertilizer price subsidy program, targeting 2 million households.
Rationalization and prioritization of existing and new programs, under the National Safety Net Strategy (NSNS).Implemented. The government has made attempts to rationalize and prioritize the various donor-managed safety nets interventions, although co-ordination remains a challenge. Government is now in the process of developing a social protection policy to help improve coordination.
Establishment of a monitoring and evaluation (M&E) system of the National Safety Net Strategy.Implemented. An M&E system has been set up in the National Safety Nets Unit (NSU).

Box 2:Enhancing Growth in the Malawi Growth and Development Strategy

Malawi Growth and Development Strategy (MGDS) reflects the authorities policy framework to reduce poverty through economic growth and empowerment of the poor. There are five strategic themes proposed: (i) achieving sustainable economic growth and economic empowerment, (ii) protection of the most vulnerable and enabling them to contribute to the economy, (iii) creating a healthy educated and well nourished productive population, (iv) infrastructure development as a pre-requisite for achieving the objectives of economic growth and social development, and (v) good governance including sound economic environment, high quality service delivery, effective institutions and rule of law, an efficient and effective public sector, and reduction in corruption.

The authorities plan to enhance growth by focusing on sectors that are identified as key for the medium and long term growth. In the medium term, the driving force behind growth is the agriculturally-based core sectors of the economy (tea, tobacco and sugar) by way of further integration of these sectors and smallholders into agro-processing to meet domestic and foreign demand. The authorities envision expanding and diversifying output and exports to meet demand in the region through irrigation, large scale farming, infrastructure expansion and rationalizing fees and tax policy toward cash crops and eliminating food insecurities. To enable private-sector led growth in these sectors, the authorities plan to improve access to financing (micro-finance schemes) and secure land registration.

In the long-term the strategy identifies tourism, mining, garment/cotton, and manufacturing as sources of high growth sectors and employment generators in the medium term. To enhance the tourism sector and attract FDI in the sector, the authorities plan to improve infrastructure and communication, enforce the regulatory framework for quality, standard and land access for tourism development. To increase mining output and value added the strategy aims at improving the technology and infrastructure to help create market outlet, and review of tax policy. While in the garment sector, the goal is to increase local content of production, develop local textile industry geared toward exports and negotiating trade opportunities. In manufacturing, the goal is to improve quality and productivity through training of workers, better infrastructure, investment incentives and build capacity to evaluate own standards.

7. Malawi’s full PRSP was adopted in April 2002 with implementation planned to cover the period 2002/03 – 2004/05. The Malawi Poverty Reduction Strategy (MPRS) was prepared by the government through a participatory process that involved a wide range of stakeholders including government officials, non-governmental organizations (NGOs), civil society, the private sector, development partners, and members of parliament. The MPRS was built around four strategic pillars as follows: (i) sustainable pro-poor growth; (ii) human capital development; (iii) improving the quality of life of the most vulnerable; and (iv) good governance and cross cutting issues. These pillars represented the main strategic grouping of the various policies and activities that are believed to provide a coherent framework for poverty reduction in Malawi.

8. The government has established an institutional framework for participatory monitoring and evaluation of the implementation of its poverty reduction strategy. An MPRS monitoring committee was established soon after the strategy was adopted. The committee was served by a broad-based Technical Working Committee (TWC) whose role was to co-ordinate monitoring and evaluation efforts. The committee has since produced and published three annual progress reports (APRs) and one comprehensive review report covering three years of MPRS implementation.

9. The first two APRs and accompanying Joint Staff Advisory Notes (JSAN) noted that implementation of the MPRS during the first two years was limited. The first APR (covering the period July 2002 – June 2003) and the accompanying JSA were submitted to the boards of IDA and the Fund in October 2003. The JSA concluded that despite initiating some of the reforms anticipated in the MPRS, progress had been limited. Performance was also poor with regard to maintaining macroeconomic stability. The second APR and JSAN (covering July 2003–June 2004) were submitted to the Boards in June-2005 and indicated that MPRS implementation was still limited.

10. Staffs consider implementation of the MPRS in its third year to have been broadly satisfactory. The third APR covers implementation of the MPRS from July 2004 to December 2005. As indicated earlier, macroeconomic performance during this period has been satisfactory. Further, as outlined in the APR (and noted in the JSAN), progress has been made in implementing the MPRS priority activities in agriculture, education, health, public expenditure management, public sector reform, and corruption prevention. Based on this performance, IDA and IMF staffs therefore conclude that the trigger on satisfactory implementation of the MPRS for at least one year has been fully met.

11. Even before the MPRS expired, the government started to prepare a successor strategy. The new strategy, the Malawi Growth and Development Strategy (MGDS) takes into account new information about poverty in Malawi from the poverty and vulnerability assessment (PVA)4 and incorporates improvements based on lessons drawn from the comprehensive review of the MPRS implementation.5 Covering the period 2006/07–2010/11, the MGDS, which includes an explicit results framework, has been prepared through a participatory process and was discussed at cabinet on May 30, 2006. Cabinet adopted the strategy in principle, subject to the finalization of a human resource and capital needs assessment. Government intends to formally adopt the strategy soon.

12. There has also been improved participation by various stakeholders in monitoring implementation of the MPRS, the preparation of its successor strategy, and in the budget process. Although the MPRS was prepared through a participatory process, there were concerns after the production of the first progress report that the monitoring of MPRS implementation did not involve all the relevant stakeholders, in particular, the private sector. The latter years of implementation have seen greater participation of civil society and the private sector in the monitoring of the MPRS. Similarly, there has been greater participation in the formulation of the successor strategy. A significant improvement over participation in the preparation and monitoring of the MPRS is that members of parliament have been more widely consulted in the preparation of the MGDS.

B. Macroeconomic Performance during 2001-05

13. After a period of uneven macroeconomic performance following the decision point in 2000, macroeconomic stability has been maintained since mid-2004, initially under an IMF SMP and then under a PRGF-supported program. In particular, all the quantitative targets under these programs have been met since mid-2004, and with the restoration of fiscal discipline, domestic debt has started to decline. Similarly, once the economy has fully recovered from the effects of last year’s drought induced food crisis, inflation is projected to decline to single digits.

14. The decision point in December 2000 coincided with the approval of a new PRGF arrangement. Policy implementation under the arrangement was poor and it expired in June 2004, with only the first review being successfully completed. This delayed the completion point being reached in late 2003 as originally envisaged.

15. Policy implementation deteriorated quickly under the PRGF-supported program following the decision point. During the two fiscal years 2000/01 and 2001/02, fiscal slippages occurred principally on account of repeated bailouts of public enterprises, a sharp increase in interest rates associated with rising domestic public borrowing, overruns on the wage bill, and overspending on other current expenditures. The policy slippages and consequent delay in completion of the first PRGF review resulted in shortfalls of external budgetary support. This set up a vicious cycle of greater recourse to domestic financing, crowding out of the private sector, rising interest rates, widening overall fiscal deficits, and worsening public debt dynamics. These trends were exacerbated in 2002 by a food crisis and the need for the importation of maize and fertilizers that added some 4½ percent of GDP to fiscal expenditures and halved external reserves. By the end of 2003/04, domestic debt approached 25 percent of GDP and domestic interest payments absorbed one quarter of the budget.

16. Performance improved significantly following the election of a new government in mid-2004. The new government demonstrated commitment to restoring macroeconomic stability by containing the spiral of domestic debt. This strategy was implemented through sharply reduced domestic borrowing in 2004/05 and a general restoration of fiscal discipline, such that by the end of 2005/06, the domestic debt is estimated to have declined to below 20 percent of GDP. Attaining this objective was helped by donor support, but was also the result of a fiscal effort that tightened the underlying balance (a barometer of the domestic fiscal effort) since 2003/04 by 1½ percent of GDP. This objective was accomplished despite a severe food crisis in 2005/06, which necessitated substantial government food security spending. Although donor support was significant, the net cost to the budget of the food security operations was 1.7 percent of GDP. Policy implementation in 2005, however, was marred by weak exchange rate management. The government pegged the exchange rate which, because of Malawi’s low reserves, resulted in the accumulation of private external payment arrears on delivered imports of goods and services. The exchange rate was allowed to depreciate in early 2006 and the backlog has been cleared end-July 2006.

17. Despite these challenges, Malawi met almost all the quantitative targets over the 18 months from mid-2004 to end-2005. These include all the quantitative performance criteria during the six months under the PRGF arrangement through end-December 2005. The outlook for performance through the end of 2005/06 is favorable. Under the program for 2006/07, a strong crop is expected to sustain a rebound in real GDP growth to 7 percent and will support a deceleration in inflation to single digits. The government remains committed to policy implementation and a strong fiscal effort that will further reduce domestic debt to about 16 percent of GDP.

18. The staffs of IDA and the IMF conclude that Malawi has met the trigger on the maintenance of macroeconomic stability and satisfactory implementation of the PRGF program. Though initially weak during the interim period, macroeconomic stability has improved significantly over the past two years, as evidenced by decelerating inflation and the falling domestic debt burden.

Box 3:Performance under IMF Programs, 2001-05

PRGF-supported program, 2001/02-2003/04:

The IMF Executive Board approved a new three-year PRGF arrangement in December 2000. The program aimed to restore macroeconomic stability by strengthening fiscal discipline in order to reduce inflation from over 30 percent in 2000 to 10 percent in 2001 and to single digits thereafter. To reduce monetary expansion and make room for private sector growth, the program targeted domestic debt repayments. Inflation was successfully reduced, though by not as much as envisaged, and largely at the expense of credit to the private sector and by depleting official external reserves. The government was not able to meet the ambitious fiscal targets and domestic financing increased to over 7 percent of GDP in each of the first two years of the program. In 2002/03, the demands imposed on the budget by the food crisis raised domestic financing to over 12 percent of GDP and domestic debt to about 25 percent of GDP by the end of 2003/04. Poor program implementation delayed the first review to late 2003. Large fiscal slippages subsequently pushed the program irrevocably off track in early 2004 and the arrangement expired in late 2004.

Staff Monitored Program, 2004/05:

The newly elected government implemented its 2004/05 budget in the context of an IMF Staff-Monitored Program. The program aimed to maintain real GDP growth around 4 percent and reduce core (non-food) inflation to about 11 percent. The inflation target was met, but output growth was weaker than expected because of the drought that reduced agricultural production in 2005. The cornerstone of the fiscal program was to curtail domestic borrowing to reduce the stock of domestic debt by 2 percent of GDP. This was to be achieved through higher donor support as well as a domestic fiscal effort to improve the underlying balance by 2 percent of GDP. Virtually all the quantitative targets, including for domestic financing, were met. Further, as part of the Bank’s FIMAG credit, the government implemented a major civil service wage reform in October 2004 that realigned pay grades and monetized in-kind benefits.

PRGF-supported program, 2005/06:

The IMF Executive Board approved a new three-year PRGF arrangement in August 2005. The 2005/06 program objectives for real GDP growth and inflation were met. The cornerstone of the fiscal program was the repayment of domestic debt that would reduce the stock to below 20 percent of GDP. The program also provided for spending on maize and fertilizer on account of the emerging food crisis. The program included structural measures to strengthen public expenditure management and financial sector management. The program also included a ceiling on the civil service wage bill and a revision of the civil service pension formula to offset the sharp increase in benefits resulting from the wage reforms in late 2004.

Malawi met all the end-September 2005 performance criteria for the first program review, which was approved by the IMF Board in February 2006. However, performance was marred by weak management of the exchange system and the use of informal administrative restrictions to control the exchange rate, which resulted in a backlog of unpaid import invoices. As the food crisis deepened, the revised program incorporated additional food security spending that received significant donor support. In a companion staff report, IMF staff has determined that Malawi met all the end-December 2005 quantitative performance criteria for the second program review. The government has acted on its commitment to improve exchange rate management by allowing the Kwacha to depreciate since early 2006 and eliminating the stock of unpaid import invoices. The prospects for the end-June 2006 targets are favorable.

C. Implementation of Structural Triggers

Improving economic governance

19. Malawi has taken significant steps that will go a long way to ensuring that public resources are used for their intended purposes, and with greater efficiency. At decision point, Malawi’s legal framework for the management of public finances and for curbing corruption had a number of weaknesses. Similarly, the public expenditure management system was beset with problems of expenditure laxity and lack of fiscal transparency. During the interim period, the government made significant strides in improving the public expenditure management system and the governance framework in general. Boxes 4 and 5 provide additional details of specific measures the government has undertaken to improve the public expenditure management system and to fight corruption, respectively.

20. In order to strengthen the legal framework for managing public finances, in 2003, the Finance and Audit Act was separated into two separate pieces of legislation: the Public Finance Management Act (PFMA) and the Public Audit Act (PAA). The new Public Finance Management Act represented a change in emphasis from the previous, narrower notion of dealing with public money to the wider and more comprehensive notion of the economic, fiscal and financial management of public finances. Further, the two Acts were designed to update the existing public finance and public audit laws in order to meet Malawi’s present and future requirements and at the same time introduce finance management and audit provisions reflecting modern trends and international best practice.

21. The Government of Malawi is now more transparent in the usage of public resources by reporting expenditures to the public on a quarterly basis. The government has continued to submit the Quarterly Expenditure Reports (QERs) to the Cabinet Committee on the Economy and the Budget and Finance Committee of parliament within six weeks of the end of the quarter. Furthermore, it now posts on its internet website the budgeted and actual protected pro-poor expenditures (PPEs) within twelve weeks of the end of the quarter. PPE reports have also been published in the press on a quarterly basis. PPEs have been of particular interest to the public because they represent expenditure items for which the government has fully committed itself to make resources available, even when there is a cash flow problem.

22. Despite various hitches, IFMIS has been rolled out in all ministries. The government of Malawi dramatically altered its previous IFMIS course in May 2005, after numerous problems with previous implementation attempts. The authorities chose to adopt the IFMIS framework successfully implemented in Tanzania, including revision of the chart of accounts, centralization of government banking and of the government payment system. A review by the World Bank in late 2005 certified the robustness of the system. Therefore, instead of piloting the system, the government decided on a full roll out, which commenced in November 2005. The system is running on two platforms, an electronic and a manual one. The electronic system is being used in eight ministries: Finance, Health, Agriculture, Education, Office of the President and cabinet, the Malawi Defense Force, the Malawi Police Service, and State House, which account for over 40 percent of the budget. In January 2006, the electronic system was extended to four other spending agencies. There is an action plan to roll-out the electronic system in all the ministries within a two year period.

Box 4:Improving Malawi’s Public Expenditure Management

Malawi has made progress in improving formulation of the budget. Firstly, as recommended by the HIPC Assessment and Action Plan (AAP), the government has taken steps to widen the coverage of donor support, thus improving the comprehensiveness of the budget. Secondly, the formulation process is also more participatory. In the past, pre-budget consultation meetings were seen as cosmetic. But civil society and the private sector have commended the new government for taking into account their representations in the formulation of the budget. Further, enough time is now allowed for the budget to be scrutinized before being passed. Amendments are made to the draft budget to take into account comments by legislators and other stakeholders. To ensure that the budget documents are easily understood by all stakeholders, the government (with assistance from the donors) is currently working on further simplification of the documents.

Significant progress has also been made in the execution of the budget. Firstly, the government has improved the credibility of the budget process by broadly remaining within the appropriated budget for the first time in over ten years. Secondly, several reforms have been undertaken in order to improve the execution of the budget as follows: (i) a policy for clearing arrears and preventing their recurrence was approved by cabinet in 2005. The policy is now being implemented, and the government has started clearing the backlog of arrears; (ii) the office of the Director of Public Procurement (ODPP) became operational in 2004 in line with the new Public Procurement Act that was passed in 2003. The provisions of the new Act conform to international standards and help ensure transparency and efficiency in public procurement; (iii) after many failed attempts in the past, the government introduced IFMIS in November 2005. There has also been a centralization of the government payment system, which has led to the closure of some 1,550 bank accounts that were susceptible to abuse; tightening of the internal controls in the execution of the budget, which has led to improved alignment of expenditures to the approved budget and reduction in the build up of arrears; and timely production of expenditure reports. The government is also currently working on a new Human Resource Management Information System (HRMIS) that will ensure effective management of the wage bill through improved payroll records.

There has also been progress in reducing the time it takes to evaluate the implementation of the budget. In particular, good progress has been made in shortening the length of time between the end of the fiscal year and the production of financial statements that are submitted to the auditor general. At the decision point, the lag was some 14 months after the end of the fiscal year. This has now been reduced to 6 months, and Malawi is on course to meet the benchmark of four months. Similarly, there has been significant improvement in the preparation and auditing of the final accounts. With assistance from development partners, the capacity of the National Audit Office has been strengthened. Until recently there was a 2–3 years time lag between the end of the fiscal year and the presentation of the audited accounts and report to the legislature, implying that the official accounting records were not very useful for fiscal management purposes. The time lag has now been reduced to 9 months. With the rolling out of IFMIS, the time it takes to fully evaluate the implementation of the budget will be reduced even further.

Box 5:Malawi’s Fight Against Corruption

Perceived corruption in Malawi is relatively better than most low income countries in Africa. Malawi’s score on the Transparency International’s Corruption Perceptions Index (TICPI) in 2005 was 2.8 out of 10. This score is better than the average for other Low Income Countries in Africa (2.5), including those countries that have already reached completion point.

After a period of laxity under the previous administration, this score reflects stabilization since 2004, when the new government of President Mutharika adopted a zero tolerance policy on corruption. In his inaugural speech in May 2004, the President made a personal commitment to fight corruption at all levels in his government.

Specific measures that have been undertaken to fight corruption include the following:

  • In 2004, the government amended the Corrupt Practices Act of 1995. Among the many improvements, the new Act widens the definition of corruption (which in the original Act was restricted to bribery only); criminalizes abuse of office and possession of unexplained wealth by public officers; and provides for the protection of whistle blowers.
  • Since most of the corruption in the public sector takes place when awarding contracts, a new Public Procurement Act was passed in 2003. The Act creates a new Office of the Director of Public Procurement (ODPP) and strengthens controls and safeguards on public procurement. This ODPP was created in 2004 and is now fully operational.
  • In 2005, the government adopted a new public payment system as part of the IFMIS. This was out of a realization that that theft of public funds and corruption was taking place partly because it was difficult to keep track of the many government accounts that were held in various commercial banks. The introduction of the new payment system has led to the aforementioned closure of some 1,550 bank accounts that were susceptible to abuse.
  • A governance and corruption baseline survey has recently been conducted by the ACB. The survey has revealed the areas where corruption is still rampant, and the ACB is in the process of developing an action plan to help reduce corruption in those departments.
  • With assistance from Norway since 2002, the capacity of the National Audit Office has been strengthened.
  • In September 2005, a US$20.9 million Threshold Country Plan was approved by the Millennium Challenge Corporation to help Malawi fight corruption and improve fiscal management. Specifically, under the Plan, the financial assistance will help Malawi reduce by 75 percent the time it takes to process corruption cases, professionalize public procurement, build capacity in government auditing functions, and strengthen independent media coverage.
  • Malawi has also signed an agreement with the World Bank Institute for support in the fight against corruption.

These measures have started showing tangible results. Over the past two years, the Anti-Corruption Bureau (ACB) has launched several investigations of high profile persons in government as well as in the opposition. These have led to arrests and convictions, while some cases are still in the courts. Some of the notable corruption cases recently pursued include those of the former Minister of Education, Mayor of City of Blantyre, and the Secretary to the Treasury. The Minister of Education and the Mayor of City of Blantyre were convicted for theft, while the case of the Secretary to the Treasury is still in court. Corruption charges have also been filed against the former President. His recent arrest on these charges led to the suspension of the Director of the ACB (he has subsequently resigned) on the grounds that his actions in the case had been politically motivated and had led to the impression that the charges would be dropped. The government has since issued a public statement to the effect that the charges against the former President have not been dropped and his prosecution will resume as soon as a new Director of the ACB is appointed in the coming weeks.

Raising the quality of education

23. Several steps have been taken to improve the quality of education since the decision point, and the results are beginning to show. The introduction of free primary education in 1994 saw enrollment rates increase from 1.9 million to 3.2 million. This put a huge strain on the education sector as a whole. As a result, during the 1990s the quality of education deteriorated at various levels of Malawi’s education system. However, over the past four years, the authorities have undertaken policies that should soon translate into improved quality indicators (such as improved completion rates and reduced drop-out rates). Notably, as part of the HIPC completion point requirements, there has been a significant increase in resources allocated to the sector, which have gone into building more schools, teacher training, and teaching and learning materials. As a result, some of the intermediate indicators have already started improving. For example, the ratio of pupils per qualified teacher has declined from 123 in 2000 to 83 in 2005. Similarly, the number of pupils per permanent classroom has declined from 114 in 2000 to 99 in 2005.

24. The sector’s share of discretionary recurrent budget has on average been 29 percent for the period 2001/02 to 2004/05. This level is well above the required threshold of 23 percent agreed in the HIPC decision point document. However, based on the approved budget for 2005/06, the share has dropped to 21 percent. The drop in the share has been due to the fact that government had to budget for drought relief and recovery programs (maize purchase and an expanded fertilizer subsidy program).

25. The level of resources allocated to teaching and learning materials has increased in real terms, but the subsidy to boarding secondary schools has not substantially decreased. In 2000/01, government policy on the operations of conventional boarding secondary schools changed such that responsibility for running boarding services, including the school fees charged to cover boarding expenses, is now in the hands of local communities. However, evidence suggests that the level of the fees being charged per student in these schools is not high enough to cover boarding expenses, indicating that the central government is still partly subsiding boarding expenses. Although more progress is desirable in reallocating the funding from boarding facilities toward teaching and learning materials, on balance this trigger has been satisfactorily implemented.

26. Donor-supplied primary textbooks for each school are now pre-packed and directly distributed from the supplier to the schools. Since 2002, donor-supplied textbooks are pre-packed and directly supplied to schools. The ministry of education only provides enrolment figures per school and per district.

27. The government was not able to increase yearly enrolment of 6,000 students for teacher training on a sustained basis. Yearly enrolment was 3,000 in 2000 and climbed to 5,490 in 2005, nearly meeting the target. The latter was achieved since two cohorts were enrolled in one year under the crash course (the Malawi Integrated In-service Teacher Education Program (MIITEP). This program has now been discontinued because it leads to a reduction in the quality of trained teachers. Annual enrolment in TTCs has therefore reverted to the original 3,000. However, a two pronged approach to increasing the number of properly trained teachers in primary schools has now been adopted. Firstly, since September 2005, the Initial Primary Teacher Education (IPTE) also known as the one-plus-one teacher training program was introduced. Under this program, students will be in college for one year and then gain teaching experience for another year. Therefore, student teachers will be spending less time in college than under the previous two-year program, but more time than under the crash course. Although the new system does not increase annual enrolment in TTCs, the number of teachers deployed in primary schools after every two years will be twice (6,000) the number under the old two-year residential training program.

28. The second approach to increasing the number of properly trained teachers in primary schools is that the number of places in TTCs is also being increased, mostly with support from donors. GTZ is financing the expansion of five TTCs while construction of a new college funded by IDA is under way in Liwonde. It is expected that once the expansion program of the existing five colleges is complete in March 2008, enrolment will increase from the current level of 3,000 to 3,810. The new 500 capacity college that is being built in Liwonde will become operational in 2009, after which total enrolment in all the colleges will increase to 4,310. Given these efforts, staffs now believe that the original target of 6000 was overly ambitious.

29. In-service training for primary teachers was institutionalized in 2001 in the form of a continuous professional development program following the phasing out of the Malawi Schools Support Program (MSSP) funded by UK DfID. The Department of Teacher Education and Development (DTED) identifies teacher training needs with the Malawi Institute of Education (MIE) as the implementing agency. Most of the in-service training has been delivered at the 315 Teacher Development Centers in the country while some have taken place at MIE.

Improving health outcomes

30. At decision point, it was recognized that Malawi had some of the worst health indicators in Sub-Saharan Africa. The authorities have since demonstrated a strong commitment to undertaking measures that would help improve these outcomes. In 2002, the government started consultations with various partners on a prioritized program of work that could be supported through sector-wide approach (SWAp) financing arrangement. The agreement for a SWAp was signed in 2004 and provides the basis for a significant scaling up of resources allocated to the health sector. However, in parallel, the authorities have already been pursuing reforms to improve health outcomes. In particular, the government has increased the level of front line staff, drugs, and other basic medical supplies. Reforms are also underway to improve the efficiency of drug procurement and distribution.

31. Significant numbers of nurse technicians, medical assistants, and radiography technicians have been trained and deployed. The government set up a human resources emergency program that has also been supported by development partners. Since the decision point, Malawi has been training and deploying over 300 nurse technicians, over 60 medical assistants and 20 radiography technicians. The thresholds for these health cadres were 200, 50 and 20, respectively. Further, the government, with support from UK DfID, has embarked on a program of topping-up salaries for health workers in order to retain them in the public sector. This is in response to a recent trend where health sector workers, especially nurses, have left the public sector and joined the private sector or migrated in search of better opportunities.

32. The average budget for drugs and medical supplies has been above the Better Health for Africa (BHA) standard and phase one reforms of the Central Medical Stores were sufficiently completed. Over the period 2001/02 and 2005/06, the average budget for drugs and medical supplies has been US1.36 per capita, which is above the BHA threshold of US$1.25 per capita. In order to improve efficiency in the procurement and distribution of these drugs, several reforms were undertaken. First, the essential drugs list was reviewed in 2001 when the government defined the Essential Health Package. Secondly, an information system to monitor compliance with agreed policies and financial allocations was also developed with support from UK’s DfID. Lastly, after initial delays, preparations were started to transform the CMS into an autonomous body (a trust). More recently, the government, following advice from the Health SWAp partners, has changed the strategy for reforming the CMS. A management contractor has been engaged to run the CMS for two years. The contractor will review various options for reforming the institution (based on experiences elsewhere in the region), recommend the best option, and implement the adopted approach. Thus, while the new strategy is being designed for reforming the CMS, the institution is already operating with a very high level of autonomy since it is being run by an independent team of management consultants.

33. The health share of discretionary recurrent budget has been below the 13 percent threshold that had been committed to at the decision point. On average, it has been 12 percent during the period 2001/02 and 2004/05. This trigger was therefore not met. As mentioned above, the reason is that over this period, the government was preparing a six-year program of work outlining health sector priorities that would be financed through a SWAp. The strategy was therefore to increase health sector spending once all SWAp arrangements were in place. Indeed, buoyed by the contributions from the SWAp partners, the 2005/06 approved allocation to health increased markedly to 18 percent of the discretionary recurrent budget. Preliminary actual expenditures for FY2005/06, available as of July 2006, show that health sector expenditures were 18 percent of the discretionary recurrent budget.6

Fighting HIV/AIDS

34. At the decision point, Malawi’s HIV prevalence rate for the working age population (15–49 years) was 16 percent, one of the highest in sub-Saharan Africa. The five triggers were therefore aimed at strengthening the institutional framework for fighting HIV/AIDS, scaling up measures for prevention, and mitigating the impact of HIV. The government’s efforts in these areas have been well supported by donors through a specialized HIV/AIDS SWAp and the Global Fund. To date, Malawi has made good progress in the fight against HIV/AIDS, and some results have already started showing. The latest HIV/AIDS monitoring report shows that HIV infection rates have stabilized in the past two years.

35. The National AIDS Commission (NAC) Trust Deed was revised to make it operationally more autonomous and the secretariat is fully staffed. Previously, the NAC used to be a department in the Ministry of Health. However, in 2005, the Trust Deed was revised providing for the appointment of a more broad-based board of trustees (government, private sector, faith community, NGOs, and civil society). Operationally, the secretariat (which serves the NAC) is independent of the government. For example, it has its own procurement manual. In order to strengthen the legal status of the NAC, government plans to have the institution established under an Act of Parliament.

36. The availability of condoms in retail outlets and of testing kits at all blood transfusion sites has increased significantly. Through its monitoring system, the NAC certifies that there is over 75 percent condom availability in various retail outlets (groceries, shops, and night clubs). These are mainly supplied by the two main reproductive health service providers: Population Services International (PSI) and Banja la Mtsogolo. There is also 70 percent availability of condoms in public hospitals, and some private hospitals, which are supplied to clients free of charge. Most of these hospitals also have blood transfusion sites and the number of testing kits has increased from about 1,500 at decision point to 4,000 in 2005.7

37. A Behavior Change Communication Strategy was developed in 2003 and is now being implemented. The strategy outlines the desired behaviors that would help fight HIV/AIDS as well as the key interventions necessary to inculcate such behaviors in people. The results of implementation of the strategy have already started showing results. For example, according to the 2005 HIV/AIDS monitoring and evaluation report, condom usage amongst men, a key behavioral change, increased from 28.7 percent in 2003 to 30.1 percent in 2004.

38. Syndromic management of sexually transmitted diseases (STDs) is now routine practice in all central hospitals, district hospitals and major Christian Health Association of Malawi (CHAM) hospitals. The NAC has also extended this practice even to some health centers. This has helped improve the diagnosis and treatment of STDs, including HIV/AIDS without requiring sophisticated and time-consuming laboratory tests or advanced medical skills. Diagnosis and treatment is based on classification by groups of symptoms and signs to determine the nature of an infection. A combination of treatments is then prescribed that are effective against the most common organisms that cause the symptoms and signs. In 2004–05, 276,666 cases were managed in government, CHAM and BLM facilities. The NAC and stakeholders are now monitoring the training of staff on STD management on a quarterly basis.

Improving access to land and credit

39. Access to land and credit remain constrained in Malawi, but there has been progress. In line with the HIPC decision point requirements, the authorities have taken steps to ensure that land in Malawi is more equitably distributed and that land rights are secured, so that households can use land as collateral for accessing credit. To this end, the government has drafted legislation and introduced reforms to ensure that more rural households have access to land and credit.

40. The draft Land Bill has been submitted to parliament. Providing equitable and secure access to land has been the centerpiece of the government’s land reform policy. A new National Land Policy was prepared in 2000 and approved by cabinet on January 17, 2002. In January 2003, a special Law Commission was empanelled to review the existing land legislation and formulate a new legislative framework for land matters that would articulate the principles of the approved Malawi National Land Policy. Following consultations, a draft Land Bill was prepared and submitted to parliament on June 13, 2006. The Bill adequately captures the main principles of equitable and secure access to land. In particular, the Bill now provides for the conferment of individual title deeds to land previously owned under customary land tenure. This means that once registered, the title of the owner will have full legal status and the land may be leased or used as security for a loan. Further, consistent with the on-going decentralisation process, the bill confers greater responsibility in the administration of land issues from the central government to districts and traditional authorities.

41. A microfinance policy has been approved by cabinet. At the decision point, a draft microfinance policy had just been prepared. The policy aims to promote best practices amongst micro-finance institutions in order to expand client outreach, improve coordination and increase capacity. It also proposes a peer-regulatory structure for the industry and the establishment of a monitoring system that can track lending volumes, number of clients and areas covered with a view to improving coordination of micro-finance activities. The authorities committed themselves to having the policy approved by cabinet. This was done in October 2002.

42. Significant progress has been made to increase access by the poor to microcredit. At the decision point, it was envisaged that the implementation of a microfinance policy would spur the expansion of micro-credit services in Malawi. The target was to increase the number of clients by 20 percent. In 2000, there were 257,276 microfinance clients. By December 2005, the number had increased to 459,906, representing a 79 percent increase.

43. A monitoring system covering all micro-finance institutions has been established. The Reserve Bank of Malawi established a monitoring system covering all microfinance institutions in 2003 under the SADC microfinance observatory initiative. The system is run by the department responsible for the supervision of non-bank financial institutions in collaboration with the Malawi Microfinance Network (MAMN). Data is collected through the administration of a comprehensive questionnaire that aims at obtaining information on the institutional characteristics of the microfinance organization itself, its market characteristics, financial services and non-financial services rendered, and the balance sheet.

Creating an effective safety net system

44. There have been improvements in the efficiency and effectiveness of the safety nets system, but more remains to be done and the reform process is ongoing. As far back as 1999, the Government of Malawi started working towards the creation of an effective safety net system that would be affordable and effective. This was out of a realization that resources were limited and hence, Malawi could not afford a safety net system that was not properly coordinated and targeted. In collaboration with the World Bank, it produced a National Safety Net Strategy which outlined the government’s medium term objectives in terms of type and size of safety net programs. Although challenges still remain, several actions have been taken towards the creation of an effective safety net system.

45. The universal starter-pack was transformed into a Targeted Input Program (TIP) in the year 2000/01. This reduced the number of farmers targeted from 2.86 million to 1.5 million. The program was scaled down further in 2001/02 to only 1 million farmers but was subsequently scaled up again, and by 2004/05, the final year of TIP, the number of beneficiaries had climbed to 2 million. From the 2005/06 season, the TIP was transformed into a fertilizer price subsidy program designed to target 1.7 million poor smallholder maize and tobacco farmers, and taking up a slightly larger amount of government expenditures. As in the case of TIP, the beneficiaries are identified through village development committees. Unfortunately, the new program is somewhat regressive compared to the TIP because the farmers need to complement the voucher scheme with their own cash in order to purchase the fertilizer, which potentially discriminates against the poorest farmers. The government tried to address this problem by scaling up the Public Works Program (PWP) which enabled some of the poorest farmers to purchase fertilizer. Overall, although further reforms may be necessary to improve the operation of the new voucher scheme, the trigger has been satisfactorily implemented.

46. Some progress has been made to rationalize and prioritize existing and new programs under the National Safety Net Strategy (NSNS). In 2002, the government established a National Safety Nets Unit (NSU) to coordinate the rationalization and prioritization of safety nets through four technical sub-committees, one for each of the four types of safety nets—Public Works Program, Targeted Inputs Program, Targeted Nutrition Program and Direct Welfare Transfers. The sub-committees have been meeting to discuss the scaling up and down of various safety nets programs. For example, as recommended in the NSNS, the PWP has been scaled up in recent years. Further, a study to look at an appropriate wage rate for all PWPs was carried out although its recommendations are yet to be implemented. However, while the government has made some attempts to rationalize and prioritize the various donor-managed safety nets interventions, actual progress has been limited. There still exist many competing programs that need to be rationalized with respect to coverage and modalities. This is partly due to the poorly coordinated positions of donors, which are expressed in a broad array of relatively uncoordinated safety net instruments. The government is aware of the difficulties and the NSU is now coordinating the development of a Social Protection Policy which will provide a more definitive framework for the implementation of various safety net programs.

47. A monitoring and evaluation (M&E) system of the National Safety Net Strategy has been established. An M&E system has been set up in the NSU for monitoring and evaluating a large number of indicators (process, inputs, outputs, and outcomes) for the four priority programs, with provision to capture information on any other program being implemented in the country. A catalogue of safety net programs has also been defined, and several report formats have been designed to extract information from the data-base. The NSU has also been involved in in-depth monitoring of individual safety net programs through field visits.

D. Use of HIPC Initiative Interim Assistance

48. As part of the HIPC decision document, it was agreed that HIPC debt relief resources would allow the government, in the context of the normal budget prioritization process, to increase funding to poverty reducing areas, supplementing domestic revenues. According to information provided by the government, savings from interim HIPC assistance have been used broadly in line with the criteria set forth at the decision point. In order to ensure that these resources would be used well, a small sub-set of high-priority activities were identified from the interim PRSP8 (since the full MPRSP had not yet been completed) that would benefit from additional funding as a result of HIPC debt relief. This list was later expanded after the finalization of a full PRSP. To ensure that the resources freed up through HIPC assistance would be used in line with the criteria set forth under the HIPC initiative, the government decided to the ring-fence funding for these expenditures. This meant that in the event of shortfalls in revenues, funding for these priority activities would be protected to ensure uninterrupted service delivery. As a result, these expenditures have since been known as Protected Pro-poor Expenditures (PPEs). The level of expenditures on PPEs during fiscal years 2001/02 to 2004/05 is summarized in Table 2. To ensure transparency and accountability in the usage of HIPC resources, the funding allocations to PPEs and out-turns have been published on the Ministry of Finance website and in the press on a quarterly basis.

49. Beyond HIPC completion point, the government remains committed to protect funding for PPEs. Although the government is about to finalize its new policy strategy, the MGDS, it has indicated commitment to continue the ring-fencing of funding for PPEs. Since some of the activities may no longer be of highest priority, it plans to revise the list of activities categorized as PPEs. The revisions will be done in consultation with various stakeholders, especially civil society and parliament.

Table 1.Malawi: Evolution of NPV of Debt to Exports Ratio From HIPC Decision Point to end-2005
NPV of debt-to-exports ratio at decision point150.0
Anticipated increase in ratio19.0
1. Due to anticipated new borrowing27.7
2. Due to anticipated change in exports of goods and services−8.68
Change in exports of goods−7.87
Change in tobacco exports−13.38
Change in tobacco prices5.19
Change in tobacco volume8.19
Change in non-tobacco exports5.51
Change in exports of service−0.81
3. Other0.0
NPV of debt-to-exports ratio (as projected at end-2005) 1/2/169.0
Unanticipated increase in ratio 3/60.2
1. Due to changes in the parameters40.5
Exchange rates8.1
Discount rates32.4
2. Due to unanticipated new borrowing3.8
Higher than expected disbursements9.7
Lower concessionality of new disbursements13.6
3. Due to unanticipated change in exports of goods and services19.7
Change in exports of goods18.3
Change in tobacco exports31.1a
Change in tobacco prices21.2
Change in tobacco volume9.9
Change in non-tobacco exports−12.9
Change in exports of services1.4
4. Other unticipated factors 4/−3.9
Actual NPV of debt-to-exports ratio 2/5/229.1
Source: WB Staff estimates

NPV of debt-to-exports ratio under assumption of full delivery of HIPC assistance in percent. See “Malawi: Enhanced HIPC Debt Initiative: Decision Point Document” IDA/R2000-234.

Exports are three-year backward looking moving average of exports of goods and services.

Changes are expressed in percentage points.

Other factors capture revision of debt data base and debt relief assumptions, as well as bilateral debt relief beyond HIPC assistance.

NPV of debt-to-exports-ratio after full delivery of HIPC assistance and bilateral debt relief beyond HIPC assistance.

Source: WB Staff estimates

NPV of debt-to-exports ratio under assumption of full delivery of HIPC assistance in percent. See “Malawi: Enhanced HIPC Debt Initiative: Decision Point Document” IDA/R2000-234.

Exports are three-year backward looking moving average of exports of goods and services.

Changes are expressed in percentage points.

Other factors capture revision of debt data base and debt relief assumptions, as well as bilateral debt relief beyond HIPC assistance.

NPV of debt-to-exports-ratio after full delivery of HIPC assistance and bilateral debt relief beyond HIPC assistance.

Table 2:Resources used on Protected Pro-poor Expenditures, FY2001/02–FY2004/05

(In millions of U.S. dollars)

2001/02

(Actual)
2002/03

(Actual)
2003/04

(Actual)
2004/05

(Actual)
Total
Agriculture
Agricultural Extensions2.212.878.016.4819.57
Small-scale Irrigation-3.381.87-5.25
Technology Generation and Technical Service---3.343.34
Water Development
Rural Waster Supply0.900.610.270.312.09
Borehole and Dam Construction3.512.300.95-6.76
Rehabilitation---0.130.13
Education
Teaching and learning materials9.055.7215.975.4036.14
Teacher’s salaries30.7249.7745.88-126.37
Teachers’ housing-1.610.370.022
Teacher training1.974.993.403.7814.14
Health
Primary Health Care8.699.97-18.66
Health Workers’ Training1.673.651.442.259.01
Curative Health Services8.846.528.807.9432.1
Infrastructure Development--1.021.102.12
Preventive Health Care0.280.286.891.088.53
Health Technical Services--0.215.375.58
Drugs14.8012.4812.2313.1652.67
Health Worker Salaries-9.64--9.64
Clinical and Population Services---0.080.08
Gender, Child Welfare and Community

Services
Gender Mainstreaming0.59---0.59
Adult Literacy-0.910.540.531.98
Family Welfare and Gender Services-0.740.360.201.3
Child Care Services-0.11-0.070.18
Police
Crime Prevention and Investigation2.482.48
Community Policing0.042.561.701.345.64
Police Officer Training-1.531.051.914.49
Labor and Vocational Training
Technical and Vocational Training1.521.971.642.137.26
Trade and Private Sector Development
Industrial Development---0.140.14
Enterprise Development Promotion0.630.291.320.262.5
Cooperatives Development---0.220.22
National Roads Authority/Local Government
Rural Feeder Roads10.684.600.76-16.04
Natural Resources
Small-scale Fishing-0.940.340.581.86
Small-scale Mining0.590.900.640.392.52
Tourism
Promotion of Tourism0.48---0.48
Tourism Services-0.390.420.411.22
Conservation and Protection of Wildlife-0.700.560.742
Total97.17129.43116.6461.84405.08
HIPC Debt Relief30.740.250.946.9168.7
Source: Malawian authorities
Source: Malawian authorities

III. DEBT RELIEF AND DEBT SUSTAINABILITY UPDATE

A. Updated Data Reconciliation for the Decision Point

50. The staffs of IDA and the IMF, together with the Malawian authorities, have reviewed the stock of debt at end-1999 against creditor statements. As a result of this review, estimates of the nominal stock and the NPV of debt after traditional debt relief as of end 1999 were reduced slightly from US$ 2,604 million and US$ 1,469 million to US$2,600 million and US$1,466 million, respectively (Table 6).

Table 3.Malawi: Selected Economic Data, 2003-25

(In percent of GDP, unless otherwise specified)

ActualProjectionsAverage
2003200420052006200720082009201020112012201320142015202020252006–152016–25
National income and prices
Real GDP growth6.17.12.88.45.66.06.05.55.04.54.54.54.54.54.55.54.5
Nominal GDP (billions of kwacha)172207246304345393447506570639717804901159828325631766
percent change15.920.518.623.513.713.913.813.212.712.112.112.112.112.112.113.912.1
Gross domestic product current prices, U.S. dollars17651903207621582280246226612869307932883512375040055565773230065854
GDP per capita (in U.S. dollars)148155166172176187198209220230241252264330414215341
percent change−10.85.56.92.71.85.05.05.65.14.64.64.64.64.64.64.44.6
Consumer price index, percent change (period average)9.611.415.513.17.27.57.47.37.37.37.37.37.37.37.37.97.3
Public finance
Total revenues (including grants)26.734.737.644.141.839.038.738.038.338.238.138.138.037.637.539.237.9
Revenue (excluding grants)20.022.625.124.924.224.223.723.723.723.723.723.723.723.723.723.923.8
Grants6.712.212.519.217.614.815.014.314.614.514.414.414.313.913.815.314.1
Total expenditure38.342.543.146.143.139.438.738.238.641.241.341.241.241.341.140.940.6
Current expenditure30.931.431.834.128.226.124.923.723.925.925.925.925.926.025.826.524.5
Investment expenditure and net lending7.411.111.411.914.913.313.814.514.715.315.315.315.315.315.314.516.1
Overall balance−11.6−7.8−5.6−2.0−1.3−0.50.0−0.2−0.3−3.0−3.1−3.2−3.2−3.7−3.6−1.7−2.7
Domestic financing11.87.73.00.4−0.4−1.8−2.6−2.5−2.50.20.30.20.20.30.2−0.8−0.7
Domestic debt20.424.823.820.016.512.88.65.12.02.02.02.02.02.02.07.3−1.5
Savings and investment
National saving3.35.18.67.916.717.616.914.115.115.815.916.016.116.316.715.217.9
Domestic saving−11.7−9.9−10.3−9.2−3.5−1.1−1.6−4.1−3.0−2.3−2.1−2.0−1.8−1.1−0.2−3.10.3
Net factor income and private transfers5.63.85.24.34.94.84.84.44.34.34.24.24.13.63.14.43.6
Net official transfers9.311.213.712.815.314.013.813.813.813.813.813.813.813.813.813.913.9
Foreign saving7.69.35.97.71.81.12.64.84.24.24.34.44.44.75.04.04.0
Gross investment10.914.414.515.618.518.719.519.019.420.120.220.320.521.121.719.221.9
External sector, public debt, and debt service
Export of goods and services, US$m4815115666146366576787387998629291001107915712287799.41669.5
Export of goods and services27.226.827.328.027.726.425.225.525.725.926.226.426.727.929.326.428.4
Imports of goods and services49.751.252.052.849.746.246.448.548.148.348.548.848.950.151.348.650.0
Current account balance (excluding official transfers)−17−21−20−20.5−17.1−15.1−16.3−18.6−18.0−18.0−18.1−18.2−18.2−18.5−18.8−17.8−18.0
Current account balance (including official transfers)−7.6−9.3−5.9−7.7−1.8−1.1−2.5−4.8−4.2−4.2−4.3−4.4−4.4−4.7−5.0−3.9−4.0
Net official aid inflows to Malawi20.018.923.821.824.722.222.122.922.822.722.622.622.522.522.322.722.7
Net official aid inflows to government11.212.216.015.318.316.216.217.117.117.017.017.117.017.016.816.817.1
Gross aid inflows14.315.718.819.120.017.717.517.517.517.517.517.517.517.517.517.917.7
Debt service paid3.23.52.83.81.71.61.30.40.40.50.50.40.50.50.71.10.6
Official aid flows outside government8.86.77.86.56.46.15.85.85.75.75.65.65.55.55.55.95.6
Usable gross official reserves (in millions US dollars)116119131114207299362399437482531586644103416374061117
In months of annual imports of goods and services1.41.31.41.22.22.93.33.43.53.63.73.83.94.44.93.14.5
Exchange rate: Kwacha per US dollar, period average97109118
Sources: Malawian authorities and IMF staff estimates.
Sources: Malawian authorities and IMF staff estimates.
Table 4.Malawi: Balance of Payments, 2000-09

(In millions of US dollars)

ActualsProjections
20002001200220032004200520062007

113
20082009
Current account balance (including grants)−51−117−216−134−178−122−169−42−27−67
Trade balance−140−158−306−351−424−473−498−456−438−511
Exports402427421441470524572593611630
Imports−542−585−727−792−894−998−1070−1049−1049−1141
Services balance−66−66−154−88−85−84−85−75−76−72
Interest public sector (net)−21−18−20−26−28−26−19−4−18
Receipts129321135914
Payments−33−26−23−27−28−26−22−9−10−6
Other factor payments (net)−16−15−24−16−17−17−19−20−21−22
Nonfactor (net)−29−33−109−47−40−41−47−51−55−58
Receipts45545040414142434648
Payments−74−87−77−87−81−83−90−95−100−106
Unrequited transfers (net)155107243305331435413488487516
Private (net)8108141118151132136139145
of which Official aid to non-gvt1211183156127162147151157158
Official (net)14898235164213284280352348371
Receipts14898235164213284280352348371
Balance of payments assistance78511342649746999298
Japan HIPC Initiative 2/001117000000
Project and humanitarian7047211105149187234253256273
Payments−1−100000000
Capital account balance (incl. errors and omissions)39856196152921118990108
Medium- and long-term flows65602411162150595772
Official disbursements125127819795981139186100
Balance of payments support3155018351833182427
Project support94728178507980726272
Amortization (amounts due before HIPC debt relief)−60−67−57−69−75−77−63−32−29−28
Foreign direct investment and other inflows27283843442630323436
MDRI debt forgiveness on debt due after current year000000184437600
MDRI grants from ADF000000037600
MDRI grants from IDA0000001798000
MDRI grants from IMF00000046000
Other liabilities (MDRI-IDA and ADF loans)000000−1813−37800
Short-term capital and errors and omissions−53−204292450000
Overall balance−12−32−155−38−25−30−58476441
Financing (- increase in reserves)123215538253058−47−64−41
Central bank1712111−3−16−496−75−85−63
Gross reserves (- increase)2414139−6−3141−93−93−63
Liabilities15−2971−42−10−18−351870
Of which: IMF (net)−1−6170−14−11111870
Purchases/drawings8023908251870
Repurchases/repayments−9−6−6−9−14−19−14000
Loans0050−5000−54000
Commercial banks−6−815−7−619−9−4−4−5
Arrears0000000000
Debt relief0272948476046302627
MDRI debt forgiveness on debt due in current year00000015200
Residual financing gap (+ underfinanced)0000000000
Memorandum items
Trade balance G&S−170−191−333−398−464−514−545−507−492−569
Total exports G&S446480471481511566614636657678
Total imports G&S−616−672−803−878−975−1080−1159−1143−1149−1247
 Total net official aid inflows181364465370369493515600584621
Net aid flows to gvt179152282214242332368449428464
Gross official aid flows (incl. IMF)281225339270309390419460441471
Grants14898235164213284280352348371
Share of total53436961697367767979
Loans1331271041069510613810893100
Program118106366999124121135123126
Project-Other163119292184199266311331318345
Debt service after relief10272575667585111137
Official grant aid flows outside gvt1211183156127162147151157158
Total grants share of total gross aid53718075788176828484
Gross usable reserves224.6184.6103.4115.6119.3131.2113.9206.5299.3362.1
Gross reserves in months of current imports4.43.31.51.61.51.51.22.23.13.5
Sources: Malawian authorities and IMF staff estimates.
Sources: Malawian authorities and IMF staff estimates.
Table 5Malawi: Comparison of Discount Rate and Exchange Rate Assumptions at end-1999 and end-2005
Discount Rates 1/2/

(In percent per annum)
Exchange Rates

(Currency per U.S. dollar)
At Decision

Point in 1999
At Completion

Point in 1999
At Decision

Point in 1999
At Completion

Point in 1999
Austrian Schilling5.473.9513.7011.66
Belgian Franc5.473.9540.1634.20
Deutsche Mark5.473.951.951.66
Danish Kroner5.323.887.406.32
European Currency Unit/Euro5.473.951.000.85
French Franc5.473.956.535.56
British Pound6.705.280.620.58
Irish Pound5.473.950.780.67
Italian Lira5.473.951,927.401,641.32
Japanese Yen1.981.91102.20117.97
Kuwaiti Dinar7.045.080.300.29
Luxembourg Franc5.473.9540.1634.20
Netherlands Guilder5.473.952.191.87
Norwegian Krone6.644.178.041.00
Portuguese Escudo5.473.95199.56169.94
Spanish Peseta5.473.95165.62141.04
Special Drawing Rights5.594.300.730.70
Swedish Krona5.803.928.537.96
Swiss Franc4.272.761.601.31
U.S. Dollar7.045.081.001.00
Sources: OECD; and IMF, International Financial Statistics.

The discount rates used are the average commercial interest reference rates (CIRRs) for the respective currencies over the six-month period ending in December 2005 for the completion point and in December 1999 for the decision point.

For all Euro area currencies, the Euro CIRR is used. For the Kuwaiti Dinar, the USD discount rate is used. For all other currencies for which the CIRRs are not available, the SDR discount rate is used.

Sources: OECD; and IMF, International Financial Statistics.

The discount rates used are the average commercial interest reference rates (CIRRs) for the respective currencies over the six-month period ending in December 2005 for the completion point and in December 1999 for the decision point.

For all Euro area currencies, the Euro CIRR is used. For the Kuwaiti Dinar, the USD discount rate is used. For all other currencies for which the CIRRs are not available, the SDR discount rate is used.

Table 6.Malawi: Nominal and Net Present Value of External Debt at Decision Point as of end End-December 1999 1/

(In millions of US dollars)

Nominal Debt StockNPV of Debt after Rescheduling 2/
At Decision PointRevised at Completion

Point 3/
At Decision PointRevised at Completion Point 3/
Total2,604.22,600.31,469.31,466.5
Multilateral2,187.12,174.51,097.61,093.9
World Bank Group1,603.01,601.4756.7756.4
IDA1,586.01,585.0740.0739.8
IBRD17.016.316.816.6
African Development Bank Group321.7323.9162.0160.0
AfDF299.3301.5137.5136.1
AfDB22.422.424.623.9
IMF87.687.668.868.8
EU/EIB95.588.665.562.2
EU 4/89.582.759.556.1
EIB6.05.96.06.1
IFAD50.450.425.925.9
PTA Bank 5/22.316.014.816.8
NDF3.33.31.51.5
BADEA1.91.91.41.4
OPEC Fund1.51.51.01.0
Paris Club bilateral337.8366.4293.8320.5
Austria20.220.215.615.6
EU-IDA administered loans 4/5.31.5
France14.014.19.89.9
Germany0.50.50.20.2
Japan293.8293.8262.1262.0
Spain8.28.25.85.8
United Kingdom 6/1.024.20.325.6
Non Paris Club bilateral43.443.435.134.7
Taiwan, Province of China36.036.030.330.3
Kuwait Fund4.24.23.02.6
South Africa 7/3.23.21.91.9
Commercial 8/36.016.242.817.3
Sources: Malawian authorities and Bank-Fund staff estimates.

Public and publicly guaranteed debt only.

Rescheduling assumes a Naples stock operation based on a cut-off date of January 1, 1982 from bilateral and commercial creditors.

Information based on latest data available at completion point.

Contrary to the decision point, IDA administered loans from the European Union are treated as loans from Paris Club creditors at completion point.

Debt owed to PTA bank was revised based on written correspondence between the Malawian authorities and the PTA Bank from December 1999 and early 2000 that was exchanged in the context of PTA’s law suit against the Government of Malawi+A3.

The increase in United Kingdom debt level is attributable to the inclusion of the Commonwealth Development Corporation loans that were initially classified as commercial loans at the time of the decision point. The United Kingdom have recently agreed to classify these loans as bilateral loans to be treated under the Paris Club umbrella.

At the time of the decision point South Africa was classified as a Paris Club creditor. But staff obtained recent information from the Paris Club confirming that although South Africa participated in previous Paris Club negotiations for Malawi (1983 and 1988), they decline the Paris Club invitation to participate in the 2001 Cologne flow agreement. At the time of the preparation of this completion point document, staff did not yet receive indication that South Africa was willing to participate in the Paris Club negotiations for the HIPC completion point of Malawi.

The decrease in commercial debt level is due to the reclassification of two creditors (Commonwealth Development Corporation and Banque Francaise pour le Commerce Exterieur) as Paris Club bilateral creditors. Staff received confirmation that these two creditors are treated under the Paris Club umbrella. Commercial creditors are Banco Bilbao, Chase Manhattan Bank, the Netherlands’ Development Finance Company (FMO), Skandinaviska Enskilda Banken, South Africa Investment Development Corporation, STD Bank and West Minster Bank.

Sources: Malawian authorities and Bank-Fund staff estimates.

Public and publicly guaranteed debt only.

Rescheduling assumes a Naples stock operation based on a cut-off date of January 1, 1982 from bilateral and commercial creditors.

Information based on latest data available at completion point.

Contrary to the decision point, IDA administered loans from the European Union are treated as loans from Paris Club creditors at completion point.

Debt owed to PTA bank was revised based on written correspondence between the Malawian authorities and the PTA Bank from December 1999 and early 2000 that was exchanged in the context of PTA’s law suit against the Government of Malawi+A3.

The increase in United Kingdom debt level is attributable to the inclusion of the Commonwealth Development Corporation loans that were initially classified as commercial loans at the time of the decision point. The United Kingdom have recently agreed to classify these loans as bilateral loans to be treated under the Paris Club umbrella.

At the time of the decision point South Africa was classified as a Paris Club creditor. But staff obtained recent information from the Paris Club confirming that although South Africa participated in previous Paris Club negotiations for Malawi (1983 and 1988), they decline the Paris Club invitation to participate in the 2001 Cologne flow agreement. At the time of the preparation of this completion point document, staff did not yet receive indication that South Africa was willing to participate in the Paris Club negotiations for the HIPC completion point of Malawi.

The decrease in commercial debt level is due to the reclassification of two creditors (Commonwealth Development Corporation and Banque Francaise pour le Commerce Exterieur) as Paris Club bilateral creditors. Staff received confirmation that these two creditors are treated under the Paris Club umbrella. Commercial creditors are Banco Bilbao, Chase Manhattan Bank, the Netherlands’ Development Finance Company (FMO), Skandinaviska Enskilda Banken, South Africa Investment Development Corporation, STD Bank and West Minster Bank.

51. Multilateral creditors: The NPV of debt of multilateral creditors as of end 1999 was reduced by US$3.7 million to US$1,094 million. This is largely because European Union loans administered by IDA are now treated as loans from Paris Club creditors. Estimates of the NPV of debt to IDA, IBRD, African Development Fund (AfDf) and African Development Bank (AfDB) were also reduced slightly, while the NPV of debt to the PTA Bank was raised by US$2 million.9

52. Bilateral and commercial creditors. The estimate of the NPV of debt owed to Paris Club creditors was increased from US$294 million to US$320 million. This was because of the reclassification of EU loans administered by IDA and because debt owed to the United Kingdom that had been classified as commercial debt at the time of the decision point is now treated as bilateral debt. Consequently, estimates of the NPV of debt owed to commercial creditors declined from US$43 million to US$17 million.

53. Estimates of exports of goods and services used to evaluate HIPC assistance at the decision point have also been revised from an average US$551 million per year over 1997–99 to US$547 million.10

B. Status of Creditor Participation and Revision of HIPC Assistance

54. As a result of these changes, the common reduction factor has climbed from 43.7 to 44.1 percent and total HIPC assistance in NPV terms has been revised upwards from US$643 million to US$646 million (Table 7).11 Malawi has received financing assurances of participation in the HIPC Initiative from creditors representing 97 percent of the NPV of HIPC assistance estimated at the decision point. All but one multilateral creditor, all Paris Club and all but one commercial creditor have confirmed their participation in the HIPC Initiative (Table 16).

Table 7.Malawi: Estimated HIPC Assistance at Decision Point (Amended) 1/

(in millions of U.S. dollars in end-December 1999 NPV terms; unless otherwise indicated)

Total Assistance under the NPV of debt-to-exports criterion 2/Common
Reduction Factor
TotalMultilateralBilateralCommercial(in percent) 3/
(in millions of U.S. dollars)
Assistance (decision point document)6434801441943.7
Assistance (amended)646482157844.1
Memorandum items:
NPV of debt (amended) 4/1,4661,09435517
3-year average of exports 5/547
Current-year exports489
NPV of debt-to-exports 6/268
Multilateral Creditors1,094
Bilateral Creditors355
Paris Club Creditors320
of which: pre-cutoff date non ODA4
Non-Paris Club Creditors35
of which: pre-cutoff date non ODA0
Commercial Creditors17
Sources: Malawian authorities and Bank-Fund staff estimates.

The proportional burden sharing approach is described in “HIPC Initiative—Estimated Costs and Burden Sharing Approaches”

Applies a hypothetical stock-of-debt operation on Naples terms and appropriate comparable treatment by other official bilateral creditors at January 1, 1982. NPV of debt-to-exports target is 150 percent.

Each creditors’ NPV reduction at the decision point in percent of its exposure at the reference year (end 1999).

Based on latest data available at completion point after full application of traditional debt relief mechanisms.

Three-year average of exports of goods and nonfactor services from 1997 to 1999.

Uses three-year average of exports of goods and nonfactor services from 1997 to 1999 as denominator.

Sources: Malawian authorities and Bank-Fund staff estimates.

The proportional burden sharing approach is described in “HIPC Initiative—Estimated Costs and Burden Sharing Approaches”

Applies a hypothetical stock-of-debt operation on Naples terms and appropriate comparable treatment by other official bilateral creditors at January 1, 1982. NPV of debt-to-exports target is 150 percent.

Each creditors’ NPV reduction at the decision point in percent of its exposure at the reference year (end 1999).

Based on latest data available at completion point after full application of traditional debt relief mechanisms.

Three-year average of exports of goods and nonfactor services from 1997 to 1999.

Uses three-year average of exports of goods and nonfactor services from 1997 to 1999 as denominator.

Table 8.Malawi: Nominal and Net Present Value of External Debt at Completion Point, End-2005 1/

(In millions of US dollars)

Legal Situation 3/Net Present Value 4/
Nominal DebtNPV of DebtAfter enhanced HIPCAfter additional bilateral assistance
Total2,969.41,919.51,272.91,189.2
Multilateral2,626.01,607.81,168.61,168.6
IDA1,933.41,171.98 35.6835.6
IBRD0.0300.0290.030.03
AfDF418.7248.41 93.6193.6
AfDB10.511.35.65.6
IMF75.241.343.343.3
EU 2/74.359.334.134.1
EIB0.40.40.20.2
IFAD63.840.423.723.7
BADEA13.811.410.510.5
OPEC Fund9.07.97.47.4
NDF26.915.514.514.5
Paris Club bilateral300.0274.283.70.0
Austria20.518.2
Belgium3.01.7
EU-IDA administered loans 2/4.83.2
France15.912.0
Germany0.20.2
Japan192.7178.4
Spain9.65.9
United Kingdom53.354.6
Non Paris Club bilateral40.935.019.919.9
Kuwait25.220.318.418.4
South Africa0.40.40.00.0
Taiwan, Province of China15.214.31.51.5
Commercial2.52.60.60.6
Sources: Malawian authorities and Bank-Fund staff estimates.

Figures are based on data as of end-December 2005.

European Economic Commission loans administered by IDA were classified as multilateral loans at decision point and have been reclassified as Paris Club bilateral loans at completion point.

Reflects the external debt situation as of end-2005, including a Paris Club Cologne flow rescheduling. Since most of Malawi’s debt was contracted after the original cut-off debt of January 1, 1982, the Paris Club fixed a new cut-off debt of January 1, 1997 to deliver interim assistance.

Assumed delivered unconditionally.

Sources: Malawian authorities and Bank-Fund staff estimates.

Figures are based on data as of end-December 2005.

European Economic Commission loans administered by IDA were classified as multilateral loans at decision point and have been reclassified as Paris Club bilateral loans at completion point.

Reflects the external debt situation as of end-2005, including a Paris Club Cologne flow rescheduling. Since most of Malawi’s debt was contracted after the original cut-off debt of January 1, 1982, the Paris Club fixed a new cut-off debt of January 1, 1997 to deliver interim assistance.

Assumed delivered unconditionally.

Table 9.Malawi: Net Present Value of External Debt, 2005 - 2025

(In millions of U.S. dollars; unless otherwise indicated)

2005200620072008200920102011201220132014201520162017201820192020202120222023202420252005-20152016-2025
ActualsProjectionsAverages
I. After traditional debt-relief mechanisms 1/
1. NPV of total debt (2+6)2/1903.51912.51922.81933.41944.41963.01983.31999.12008.72023.72041.22061.42096.72140.12183.12232.12284.52341.32402.62469.52544.41966.92275.6
2. NPV of outstanding debt (3+4)1903.51853.21806.71768.41726.11684.11636.71584.41525.71468.11408.21345.71289.51232.31168.51104.41037.6969.3899.2828.0756.31669.61063.1
3. Official bilateral and commercial257.2238.2220.2203.1187.3172.8158.0144.0129.9115.6101.286.977.568.559.251.945.338.832.928.425.4175.251.5
3. Multilateral1646.31615.01586.51565.31538.81511.31478.61440.41395.91352.51307.01258.81212.01163.81109.31052.5992.3930.5866.3799.6731.01494.31011.6
IDA1183.61182.01178.11171.91159.11143.31123.91100.61072.61042.41010.1974.0935.4895.8850.8804.2754.6703.6650.6595.5538.71124.3770.3
IMF67.444.426.920.215.212.09.16.12.91.50.00.00.00.00.00.00.00.00.00.00.018.70.0
African Development Bank Group259.7258.5257.0254.9252.5249.7246.1243.3239.4234.9229.9224.6219.1213.0206.3199.0191.4183.6175.5167.1158.6247.8193.8
Others135.7130.1124.6118.2111.9106.399.590.481.073.867.060.157.555.052.249.346.343.340.237.033.7103.547.5
4. Official bilateral and commercial257.2238.2220.2203.1187.3172.8158.0144.0129.9115.6101.286.977.568.559.251.945.338.832.928.425.4175.251.5
Paris Club235.4220.3204.3188.6174.2161.0147.6135.0122.2109.396.382.973.764.855.748.642.135.730.025.722.9163.148.2
Other official bilateral and commercial21.817.915.914.513.111.810.49.07.66.24.84.03.93.73.53.43.23.02.92.72.512.13.3
II. After delivery of enhanced HIPC assistance
1. NPV of total debt (2+6) 2/1887.21315.01370.41417.71465.01520.61580.11635.91688.61749.01811.61877.01948.32028.22109.92197.22253.72314.42379.32449.22526.21585.52208.4
NPV of total debt after full delivery 3/1272.91315.01370.41417.71465.01520.61580.11635.91688.61749.01811.61877.01948.32028.22109.92197.22253.72314.42379.32449.22526.21529.72208.4
2. NPV of outstanding debt (3+4)1887.21255.71254.31252.71246.71241.71233.51221.21205.61193.41178.51161.31141.21120.41095.41069.51006.8942.4875.9807.8738.21288.2995.9
3. Official bilateral and commercial279.499.992.986.480.574.468.662.957.151.245.340.135.731.527.223.219.816.413.311.09.290.822.7
Paris Club243.182.075.870.465.460.355.450.545.640.735.731.528.024.821.618.615.813.110.68.97.875.018.1
Other official bilateral and commercial36.317.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.415.84.7
4. Multilateral1607.81155.781161.481166.221166.241167.31164.91158.31148.61142.21133.21121.21105.51088.91068.21046.3987.0926.0862.6796.8729.01197.5973.2
IDA1171.9844.7853.1860.7864.2866.4866.5865.2861.5856.9851.4844.3836.4828.2816.5804.2754.6703.6650.6595.5538.7887.5737.3
IMF41.328.723.919.715.212.09.16.12.91.50.00.00.00.00.00.00.00.00.00.00.014.60.0
African Development Bank Group259.7195.8199.0202.1205.1208.1211.1214.5217.3220.3223.3224.6219.1213.0206.3199.0191.4183.6175.5167.1158.6214.2193.8
Others134.986.785.483.781.880.778.172.666.863.458.552.250.147.745.443.141.038.836.534.231.881.242.1
III. After unconditional delivery of enhanced HIPC assistance 3/
1. NPV of total debt (2+6) 2/1272.91315.01370.41417.71465.01520.61580.11635.91688.61749.01811.61877.01948.32028.22109.92197.22253.72314.42379.32449.22526.21529.72208.4
2. NPV of outstanding debt (3+4)1272.91255.71254.31252.71246.71241.71233.51221.21205.61193.41178.51161.31141.21120.41095.41069.51006.8942.4875.9807.8738.21232.4995.9
3. Official bilateral and commercial104.399.992.986.480.574.468.662.957.151.245.340.135.731.527.223.219.816.413.311.09.274.922.7
4. Multilateral1168.61155.81161.51166.21166.21167.31164.91158.31148.61142.21133.21121.21105.51088.91068.21046.3987.0926.0862.6796.8729.01157.5973.2
IV. After bilateral debtrelief beyond HIPC assistance 4/
1. NPV of total debt (2+6) 2/1887.21233.01294.51347.31399.61460.31524.71585.31642.91708.31775.81845.51920.32003.42088.32178.62237.92301.42368.72440.32518.41532.62190.3
NPV of total debt after full delivery 3/1189.21233.01294.51347.31399.61460.31524.71585.31642.91708.31775.81845.51920.32003.42088.32178.62237.92301.42368.72440.32518.41469.22190.3
Multilateral1168.61155.81161.51166.21166.21167.31164.91158.31148.61142.21133.21121.21105.51088.91068.21046.3987.0926.0862.6796.8729.01157.5973.2
Bilateral20.617.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.414.34.7
2. NPV of outstanding debt (3+4)1887.21173.71178.51182.31181.31181.41178.11170.71160.01152.71142.71129.81113.11095.61073.81050.9991.0929.4865.3798.8730.41235.3977.8
3. Official bilateral and commercial279.417.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.437.94.7
Paris Club243.10.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.022.10.0
Other official bilateral and commercial36.317.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.415.84.7
4. Multilateral1607.81155.81161.51166.21166.21167.31164.91158.31148.61142.21133.21121.21105.51088.91068.21046.3987.0926.0862.6796.8729.01197.5973.2
V. After possible topping up of HIPC assistance 4/
1. NPV of total debt (2+6) 2/1887.2817.1882.1948.01018.21097.01181.61263.21343.21430.61523.31622.51736.81859.91989.32126.22196.02269.92348.12430.92520.61217.42110.0
NPV of total debt after full delivery 3/1189.2817.1882.1948.01018.21097.01181.61263.21343.21430.61523.31622.51736.81859.91989.32126.22196.02269.92348.12430.92520.61154.021100
Multilateral1168.6747.1756.0773.5790.9809.7827.1841.2853.5868.8884.6901.7925.1948.1971.4995.8946.8895.9843.1788.2731.7847.4894.8
Bilateral and commercial20.610.710.19.59.08.47.97.36.86.25.75.14.53.93.32.72.42.01.61.20.89.32.8
2. NPV of outstanding debt (3+4)1887.2757.8766.1783.0799.9818.1835.0848.5860.3875.1890.3906.8929.6952.0974.7998.5949.1897.9844.7789.4732.5920.1897.5
3. Official bilateral and commercial279.410.710.19.59.08.47.97.36.86.25.75.14.53.93.32.72.42.01.61.20.832.82.8
Paris Club243.10.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.022.10.0
Other official bilateral and commercial36.310.710.19.59.08.47.97.36.86.25.75.14.53.93.32.72.42.01.61.20.810.72.8
4. Multilateral1168.6747.1756.0773.5790.9809.7827.1841.2853.5868.8884.6901.7925.1948.1971.4995.8946.8895.9843.1788.2731.7847.4894.8
IDA835.6546.2562.2578.6594.9611.5628.5645.8663.3681.4700.2719.5739.5760.5781.9804.2754.6703.6650.6595.5538.7640.8704.9
IMF43.317.07.97.67.57.66.85.22.91.50.00.00.00.00.00.00.00.00.00.00.09.80.0
African Development Bank Group199.2126.1127.4128.5129.6130.6131.4132.7133.5134.3135.0135.2137.4139.7142.0144.4146.8149.4152.1154.9157.9137.1146.0
Others90.557.958.558.858.960.060.357.553.851.649.347.048.147.947.547.345.342.940.437.835.259.743.9
VI. After MDRI assistance and bilateral debt relief beyond HIPC assistance 4/
1. NPV of total debt (2+6) 2/1887.2242.3298.2345.8397.3456.7520.3581.8642.8710.1780.2855.2943.21040.01142.51251.21366.21487.01613.51746.01886.6623.91333.1
NPV of total debt after full delivery 3/224.1242.3298.2345.8397.3456.7520.3581.8642.8710.1780.2855.2943.21040.01142.51251.21366.21487.01613.51746.01886.6472.71333.1
Multilateral203.5165.0165.2164.8163.9163.7160.4154.8148.5144.1137.6130.9128.4125.6122.4118.9115.3111.7107.4102.597.2161.0116.0
Bilateral and commercial20.617.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.414.34.7
2. NPV of outstanding debt (3+4)1887.2183.0182.2180.8179.0177.8173.6167.1159.9154.6147.2139.5136.0132.2128.0123.5119.3115.0110.1104.598.6326.6120.7
3. Official bilateral and commercial279.417.917.016.115.114.113.212.311.410.59.68.67.66.65.64.64.03.42.72.11.437.94.7
4. Multilateral1168.6165.0165.2164.8163.9163.7160.4154.8148.5144.1137.6130.9128.4125.6122.4118.9115.3111.7107.4102.597.2248.8116.0
VII. After MDRI and possible topping up assistance 5/
1. NPV of total debt (2+6) 2/1887.2180.1239.5293.0354.0426.9508.4587.4666.0750.8841.4940.11056.61181.81313.81453.11596.81741.81889.82039.82194.0612.21540.8
NPV of total debt after full delivery 3/169.6180.1239.5293.0354.0426.9508.4587.4666.0750.8841.4940.11056.61181.81313.81453.11596.81741.81889.82039.82194.0456.11540.8
Multilateral149.0110.1111.5112.8114.0116.1117.7116.7113.8111.5109.0108.0111.2112.9114.5116.2116.4113.2109.5105.2100.5116.6110.8
Bilateral and commercial20.610.710.19.59.08.47.97.36.86.25.75.14.53.93.32.72.42.01.61.20.89.32.8
2. NPV of outstanding debt (3+4)1887.2120.8121.6122.4123.0124.5125.5124.1120.5105.1114.7113.1115.7116.9117.8119.0118.7115.2111.1106.4101.3280.9113.5
3. Official bilateral and commercial279.410.710.19.59.08.47.97.36.86.25.75.14.53.93.32.72.42.01.61.20.832.82.8
4. Multilateral1168.6110.1111.5112.8114.0116.1117.7116.7113.898.9109.0108.0111.2112.9114.5116.2116.4113.2109.5105.2100.5208.1110.8
IDA835.635.836.738.039.240.541.943.544.645.847.248.850.652.253.855.457.256.154.552.450.044.942.3
IMF43.32.92.93.03.13.23.33.52.91.50.00.00.00.00.00.00.00.00.00.00.00.00.0
African Development Bank Group199.213.613.313.012.712.412.112.312.412.512.212.612.913.213.513.914.214.615.015.414.514.0
Others90.557.958.558.858.960.060.357.553.851.649.347.048.147.947.547.345.342.940.437.835.229.927.2
Memorandum items:
NPV of new borrowing0.059.3116.0165.0218.3278.9346.6414.7482.9555.6633.1715.7807.2907.81014.51127.71246.91372.01503.41641.51788.0327.01212.5
Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

Refers to public and publicly guaranteed external debt only and assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at end-1999 with a cutoff-date of January 1, 1982, and at least comparable action by other official bilateral creditors.

Discounted on the basis of the average six-month commercial interest reference rate for the respective currency as of end-December 2005. The conversion of currency-specific NPVs into U.S. dollars occurs for all years at the base date exchange rate (December 2005).

NPV of total debt assuming the entire HIPC Initiative assistance is fully delivered as of end-December 2005.

After debt relief beyond HIPC offered by some of the Paris Club creditors on avoluntary basis.

Includes bilateral debt relief beyond HIPC assistance and adjusts new borrowing assumptions for change in IDA and AfDF allocations.

Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

Refers to public and publicly guaranteed external debt only and assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at end-1999 with a cutoff-date of January 1, 1982, and at least comparable action by other official bilateral creditors.

Discounted on the basis of the average six-month commercial interest reference rate for the respective currency as of end-December 2005. The conversion of currency-specific NPVs into U.S. dollars occurs for all years at the base date exchange rate (December 2005).

NPV of total debt assuming the entire HIPC Initiative assistance is fully delivered as of end-December 2005.

After debt relief beyond HIPC offered by some of the Paris Club creditors on avoluntary basis.

Includes bilateral debt relief beyond HIPC assistance and adjusts new borrowing assumptions for change in IDA and AfDF allocations.

Table 10.Malawi: External Debt Service After Full Implementation of Debt-Relief Mechanisms, 2006-2025

(In millions of U.S. dollars)

200620072008200920102011201220132014201520162017201820192020202120222023202420252006-20152016-2025
Averages
I. After traditional debt-relief mechanisms 1/
Total debt service (including new debt)127.9123.0113.8117.2116.1120.9129.8138.7136.4137.7139.1129.2128.1136.0137.8142.1145.4149.2152.6155.7126.1141.5
Total debt service on outstanding debt126.8121.1111.1113.7111.8115.7118.8123.2119.9120.0120.2111.5110.4114.6112.4112.5111.3110.3108.5106.0118.2111.8
Multilateral101.397.188.693.092.896.9101.0105.7102.6102.9103.7100.199.5103.7103.8104.7103.7103.5103.2102.398.2102.8
IDA53.055.357.463.666.169.072.175.776.777.579.880.880.183.783.484.383.683.483.282.566.682.5
IMF25.919.47.86.03.83.43.43.41.61.60.00.00.00.00.00.00.00.00.00.07.60.0
African Development Bank11.111.411.912.212.513.212.213.313.814.014.214.314.515.015.215.315.215.215.215.112.614.9
Others11.311.011.611.310.311.313.313.210.69.99.75.15.05.05.15.14.94.94.94.811.45.4
Official bilateral and commercial25.624.022.520.719.118.817.717.517.317.116.611.410.910.88.67.87.66.85.33.720.08.9
Paris Club20.621.120.318.617.116.915.915.715.515.415.511.010.510.58.37.57.26.55.03.417.78.6
Other official bilateral and commercial4.92.92.22.12.01.91.91.81.81.71.00.30.30.30.30.30.30.30.30.32.30.4
II. After enhanced HIPC assistance
Total debt service (including new debt)70.654.855.860.860.464.173.881.178.381.684.485.685.392.496.0136.0139.6143.8147.9152.068.1116.3
Total debt service on outstanding debt69.652.953.257.456.258.962.765.661.764.065.667.867.670.970.7106.4105.6104.9103.8102.360.286.6
Multilateral62.243.044.148.947.851.055.057.954.256.559.062.162.365.765.8102.3101.5101.3101.0100.252.182.1
IDA27.228.229.433.835.237.438.941.141.842.643.944.444.447.547.684.383.683.483.282.535.564.5
IMF16.65.95.25.43.83.43.43.41.61.60.00.00.00.00.00.00.00.00.00.05.00.0
African Development Bank10.94.14.44.64.74.94.65.45.35.67.214.314.515.015.215.315.215.215.215.15.514.2
Others7.64.85.15.14.15.28.18.05.56.87.93.53.43.22.92.72.72.72.72.66.03.4
Official bilateral and commercial7.39.99.08.48.38.07.77.67.67.56.65.75.35.34.94.14.03.62.82.28.14.4
Paris Club3.78.07.26.66.66.46.26.16.06.05.14.33.93.93.63.23.22.82.01.46.33.3
Other official bilateral and commercial3.61.81.81.81.71.61.61.51.51.51.41.41.41.31.30.80.80.80.80.81.81.1
III. After bilateral debt relief beyond HIPC
Total debt service (including new debt)66.946.848.654.253.857.767.675.072.275.679.381.381.488.492.4132.7136.4141.0145.9150.661.8113.0
Total debt service on outstanding debt65.944.945.950.749.652.656.659.555.758.060.563.663.767.067.1103.2102.4102.1101.8100.953.983.2
Multilateral62.243.044.148.947.851.055.057.954.256.559.062.162.365.765.8102.3101.5101.3101.0100.252.182.1
Official bilateral and commercial3.71.81.81.81.71.61.61.51.51.51.41.41.41.31.30.80.80.80.80.81.91.1
Paris Club0.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.0
Other official bilateral and commercial3.61.81.81.81.71.61.61.51.51.51.41.41.41.31.30.80.80.80.80.81.81.1
IV. After possible topping-up of HIPC assistance
Total debt service (including new debt)55.525.718.119.719.922.932.839.738.239.540.133.533.537.941.9121.2125.9130.5135.5140.2
Total debt service on outstanding debt54.423.715.416.215.617.721.824.221.721.921.215.715.816.516.691.691.891.591.390.523.354.3
Multilateral50.922.614.315.214.616.820.823.320.821.020.414.915.015.715.891.191.391.190.990.022.053.6
IDA20.77.67.98.79.19.59.910.410.510.611.011.111.011.511.584.383.683.483.282.510.547.3
IMF13.59.90.70.40.21.11.92.51.61.60.00.00.00.00.00.00.00.00.00.03.30.0
African Development Bank10.93.43.63.73.84.03.74.24.24.34.92.92.93.03.03.13.03.03.03.04.63.2
Others5.81.82.22.31.42.25.46.24.54.54.51.01.11.21.33.74.74.64.64.63.63.1
Official bilateral and commercial3.51.11.11.11.01.00.90.90.90.90.90.80.80.80.80.50.50.50.50.51.20.6
 Paris Club0.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.0
 Other official bilateral and commercial3.41.11.11.11.01.00.90.90.90.90.90.80.80.80.80.50.50.50.50.51.20.6
V. After MDRI Assistance and bilateral debt relief beyond HIPC 2/
Total debt service (including new debt)44.25.76.57.68.611.016.121.122.524.124.022.823.027.031.135.039.644.950.556.216.835.4
Total debt service on outstanding debt43.23.83.94.14.35.95.15.66.06.55.25.15.35.55.85.55.55.96.46.58.85.7
Multilateral39.51.92.12.32.64.33.64.04.55.03.73.73.94.24.54.64.65.15.65.87.04.6
IDA18.50.81.01.31.51.71.62.12.62.82.82.83.03.23.43.63.64.04.54.73.43.6
IMF10.50.00.00.00.01.61.61.61.61.60.00.00.00.00.00.00.00.00.00.01.80.0
African Development Bank10.51.11.01.01.01.00.30.40.40.60.90.90.91.01.01.01.11.11.11.11.71.0
Others7.64.85.15.14.15.28.18.05.56.87.93.53.43.22.92.72.72.72.72.66.03.4
Official bilateral and commercial3.71.81.81.81.71.61.61.51.51.51.41.41.41.31.30.80.80.80.80.81.91.1
VI. After MDRI and possible topping-up of HIPC assistance 3/
Total debt service (including new debt)43.84.55.06.07.07.913.319.121.322.722.621.121.726.030.635.343.549.656.062.415.136.9
Total debt service on outstanding debt42.82.62.22.32.32.11.52.63.53.62.01.41.51.61.71.34.24.75.15.36.62.9
Multilateral39.31.51.11.31.31.20.61.72.62.71.20.50.70.80.90.83.74.24.74.95.32.2
IDA18.30.60.30.40.40.40.20.70.70.60.40.40.50.70.70.63.64.04.54.72.32.0
IMF10.50.10.00.00.00.00.00.71.61.60.00.00.00.00.00.00.00.00.00.01.50.0
African Development Bank10.50.80.80.80.80.80.30.30.30.60.80.20.20.20.20.20.20.20.20.21.60.2
Others5.91.82.22.31.42.25.46.24.54.54.51.01.11.21.33.74.74.64.64.63.63.1
Official bilateral and commercial3.41.11.11.11.01.00.90.90.90.90.90.80.80.80.80.50.50.50.50.51.20.6
Memorandum items:
Debt service of new debt1.11.92.73.54.35.111.015.516.517.618.817.717.721.425.329.634.138.944.149.77.929.7
Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

Refers to public and publicly guaranteed external debt only and assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at end-1999 with a cutoff-date of January 1, 1982, and at least comparable action by other official bilateral creditors.

After MDRI relief from certain multilateral institutions and debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

Includes debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis and adjusts new borrowing assumptions for change in IDA and AfDF allocations.

Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

Refers to public and publicly guaranteed external debt only and assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at end-1999 with a cutoff-date of January 1, 1982, and at least comparable action by other official bilateral creditors.

After MDRI relief from certain multilateral institutions and debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

Includes debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis and adjusts new borrowing assumptions for change in IDA and AfDF allocations.

Table 11.Malawi: External Debt Indicators, 2005-2025 1/

(In percent, unless otherwise indicated)

2005200620072008200920102011201220132014201520162017201820192020202120222023202420252005-20152016-2025
ActualsProjectionsAverages
After traditional debt relief mechanisms 2/
NPV of debt-to-GDP ratio91.787.183.677.772.367.763.860.256.653.450.447.745.443.441.539.738.036.535.133.832.669.539.4
NPV of debt-to-exports ratio 3/4/366.8339.4317.6304.0295.9284.1268.6250.0232.7217.5203.5190.6179.9170.3161.2152.9145.1138.0131.3125.2119.7280.0151.4
NPV of debt-to-revenue ratio 5/365.6350.2346.1321.2305.3285.9269.1254.0239.0225.4212.9201.3191.7183.3175.0167.6160.6154.1148.1142.5137.5288.6166.2
Debt service-to-exports ratio20.819.317.317.315.715.115.114.913.612.812.010.39.59.38.88.48.07.67.26.816.28.8
Debt service-to-revenue ratio 5/23.422.118.918.416.916.416.516.515.214.413.611.811.010.910.310.09.69.28.88.417.910.4
After delivery of enhanced HIPC assistance
NPV of debt-to-GDP ratio90.959.959.657.054.552.550.849.247.646.244.843.442.241.140.139.137.536.134.733.532.355.738.0
NPV of debt-to-exports ratio 3/4/363.7233.3226.3222.9222.9220.1214.0204.6195.6188.0180.6173.6167.1161.4155.8150.5143.2136.4130.1124.2118.8224.7146.1
NPV of debt-to-exports ratio (existing debt only)363.7222.8207.2197.0189.7179.7167.0152.7139.7128.2117.5107.497.989.280.973.264.055.547.941.034.7187.769.2
NPV of debt-to-revenue ratio 5/362.5240.8246.6235.5230.0221.4214.4207.9200.9194.8189.0183.3178.2173.7169.2165.0158.4152.3146.6141.3136.5231.3160.5
Debt service-to-exports ratio11.58.68.59.08.28.08.68.77.87.67.36.86.36.36.18.07.67.37.06.68.66.9
Debt service-to-revenue ratio 5/12.99.99.39.58.88.79.49.68.78.58.27.87.37.47.29.69.28.98.58.29.58.2
After unconditional delivery of enhanced HIPC assistance
NPV of debt-to-GDP ratio61.359.959.657.054.552.550.849.247.646.244.843.442.241.140.139.137.536.134.733.532.353.038.0
NPV of debt-to-exports ratio 3/4/245.3233.3226.3222.9222.9220.1214.0204.6195.6188.0180.6173.6167.1161.4155.8150.5143.2136.4130.1124.2118.8214.0146.1
NPV of debt-to-revenue ratio 5/244.5240.8246.6235.5230.0221.4214.4207.9200.9194.8189.0183.3178.2173.7169.2165.0158.4152.3146.6141.3136.5220.5160.5
After unconditional delivery of bilateral debt relief beyond HIPC 6/
NPV of debt-to-GDP ratio57.356.256.354.252.150.449.047.746.345.143.942.741.640.639.738.737.335.934.633.432.250.837.7
NPV of debt-to-exports ratio 3/4/229.1218.8213.8211.9213.0211.3206.5198.3190.3183.6177.0170.7164.7159.4154.2149.2142.2135.6129.5123.8118.5204.9144.8
NPV of debt-to-exports ratio (existing debt only)229.1208.3194.6185.9179.8171.0159.5146.4134.4123.9113.9104.595.587.279.372.063.054.847.340.534.4167.967.8
NPV of debt-to-revenue ratio 5/228.4225.8233.0223.8219.8212.7206.9201.4195.5190.3185.2180.2175.6171.6167.4163.6157.3151.5146.0140.8136.1211.2159.0
Debt service-to-exports ratio10.97.47.48.07.37.27.88.17.27.06.86.56.06.15.97.87.57.26.96.67.86.7
Debt service-to-revenue ratio 5/12.38.48.18.57.87.88.98.07.97.77.47.07.16.99.39.08.78.48.18.68.0
After possible topping-up of HIPC assistance 6/
NPV of debt-to-GDP ratio90.937.238.438.137.937.838.038.037.937.837.637.537.637.737.837.836.635.434.333.232.342.736.0
NPV of debt-to-exports ratio 3/4/363.7145.0145.7149.1154.9158.8160.0158.0155.6153.7151.9150.0149.0148.0146.9145.6139.5133.8128.4123.3118.6172.4138.3
NPV of debt-to-exports ratio (existing debt only)363.7134.5126.5123.1121.7118.4113.1106.199.794.088.883.979.775.872.068.460.352.946.240.034.5135.461.4
NPV of debt-to-exports ratio after full delivery in 2005 3/4/150.0145.0145.7149.1154.9158.8160.0158.0155.6153.7151.9150.0149.0148.0146.9145.6139.5133.8128.4123.3118.6153.0138.3
NPV of debt-to-revenue ratio 5/228.4149.6158.8157.5159.9159.7160.3160.5159.8159.4158.9158.5158.8159.3159.5159.6154.4149.4144.7140.3136.2164.8152.1
Debt service-to-exports ratio9.04.02.72.92.72.93.84.33.83.73.42.72.52.62.77.26.96.66.46.14.04.7
Debt service-to-revenue ratio 5/10.24.63.03.12.93.14.24.74.34.13.93.12.93.03.18.58.38.07.87.64.45.6
After unconditional delivery of MDRI and bilateral debt relief beyond HIPC assistance 7/
NPV of debt-to-GDP ratio10.811.013.013.914.815.816.717.518.118.719.319.820.421.121.722.322.723.223.623.924.115.422.3
NPV of debt-to-exports ratio 3/4/43.243.049.354.460.566.170.572.874.576.377.879.180.982.884.385.786.887.688.288.588.862.685.3
NPV of debt-to-revenue ratio 5/43.044.453.757.562.466.570.673.976.579.181.483.586.389.191.693.996.097.999.4100.8101.964.494.0
Debt service-to-exports ratio7.20.91.01.11.21.41.92.32.22.22.11.81.71.82.02.12.22.32.42.52.12.1
Debt service-to-revenue ratio 5/8.11.01.11.21.31.52.12.52.52.52.32.12.02.22.32.52.62.82.93.02.42.5
After unconditional delivery of MDRI, topping up and bilateral debt relief beyond HIPC assistance 7/
NPV of debt-to-GDP ratio8.28.210.411.813.214.716.317.718.819.820.821.722.924.025.025.826.627.227.627.928.114.525.7
NPV of debt-to-exports ratio 3/4/32.732.039.646.153.961.868.873.577.180.783.986.990.694.097.099.5101.4102.6103.3103.4103.259.198.2
NPV of debt-to-revenue ratio 5/32.633.043.148.755.662.269.074.679.283.687.891.896.6101.2105.3109.1112.2114.6116.5117.7118.560.9108.4
Debt service-to-exports ratio7.10.70.80.90.91.01.52.12.12.11.91.71.61.81.92.12.42.52.62.71.92.1
Debt service-to-revenue ratio 5/8.00.80.80.91.01.11.72.32.42.42.21.91.92.12.32.52.93.13.23.42.12.5
Memorandum items (in millions of U.S. dollars):
NPV of debt after enhanced HIPC assistance1887.21315.01370.41417.71465.01520.61580.11635.91688.61749.01811.61877.01948.32028.22109.92197.22253.72314.42379.32449.22526.21585.52208.4
Of which: existing debt only1887.21255.71254.31252.71246.71241.71233.51221.21205.61193.41178.51161.31141.21120.41095.41069.51006.8942.4875.9807.8738.21288.2995.9
Debt service after enhanced HIPC assistance70.654.855.860.860.464.173.881.178.381.684.485.685.392.496.0136.0139.6143.8147.9152.068.1116.3
GDP2075.62194.52300.02487.02688.62898.93110.83322.33548.23789.54047.14322.34616.24930.05265.25623.26005.56413.86849.97315.67813.02951.15915.5
Exports of goods and services 3/565.7614.451636.2657.0678.1737.9799.2861.6928.81001.21079.31163.51254.21352.01457.51571.11693.71825.81968.12121.62287.1778.11669.5
Exports of goods and services (three-year avg.) 3/4/519.0563.6605.5635.9657.1691.0738.4799.6863.2930.51003.11081.31165.71256.61354.61460.21574.11696.91829.21971.92125.6727.91551.6
Government revenue 5/520.6546.2555.6601.9636.9686.7736.9787.0840.5897.6958.71023.91093.51167.81247.21332.01422.61519.31622.61732.91850.7706.21401.3
Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

All debt indicators refer to public and publicly guaranteed (PPG) debt and are defined after rescheduling, unless otherwise indicated.

Reflect a hypothetical stock-of-debt operation on Naples terms at end-1999 for Paris Club creditors as calculated in the HIPC decision point document.

Exports of goods and services as defined in IMF, Balance of Payments Manual, 5th edition, 1993.

Based on a three-year average of exports on the previous year (e.g., export average over 2003-2005 for NPV of debt-to-exports ratio in 2005).

Revenue is defined as central government revenue, excluding grants.

After debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

After MDRI relief from certain multilateral institutions and debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

Sources: Malawian authorities; and Bank-Fund staff estimates and projections.

All debt indicators refer to public and publicly guaranteed (PPG) debt and are defined after rescheduling, unless otherwise indicated.

Reflect a hypothetical stock-of-debt operation on Naples terms at end-1999 for Paris Club creditors as calculated in the HIPC decision point document.

Exports of goods and services as defined in IMF, Balance of Payments Manual, 5th edition, 1993.

Based on a three-year average of exports on the previous year (e.g., export average over 2003-2005 for NPV of debt-to-exports ratio in 2005).

Revenue is defined as central government revenue, excluding grants.

After debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

After MDRI relief from certain multilateral institutions and debt relief beyond HIPC offered by some of the Paris Club creditors on a voluntary basis.

Table 12.Malawi: Enhanced HIPC Initiative Assistance Levels and Possible Topping-Up at Completion Point

(In millions of U.S. dollars; unless otherwise indicated)

3-year exportsNPV of debt-to-
moving averageNPV ofNPV of debtexports ratioCommon Reduction
NPV of debt3/assistanceafter assistance(in percent)Factor
end-1999
Assistance at the Decision Point 1/1466.5 2/546.8646.3820.2 4/150%44.1%
end-2005
Topping up at Completion Point
Completion Point Estimates
NPV after enhanced HIPC assistance1272.9 5/519.0245.3
NPV after bilateral debt relief beyond HIPC1189.2 5/6/519.0229.1
Calculation of possible topping up assistance
Total NPV after bilateral debt relief beyond HIPC1189.2 5/6/519.0410.7778.4150.034.5%
Multilateral1168.6403.6765.0
Bilateral and commercial20.67.113.5
Sources: Malawian authorities; and IDA and IMF staff estimates.

HIPC assistance as amended at the completion point. NPV figures calculated using end-1999 parameters.

NPV of debt after assuming a stock-of-debt operation on Naples terms at the end-1999 and at least comparable treatment by non-Paris Club and commercial creditors.

Exports of goods and non-factor services.

Assuming unconditional delivery at end-1999 and applied to the stock of debt outstanding as of end-1999.

Assuming unconditional delivery at end-2005 and applied to the stock of debt outstanding as of end-2005.

Includes debt relief beyond HIPC initiative assistance provided by most of the Paris Club creditors on a voluntary basis.

Sources: Malawian authorities; and IDA and IMF staff estimates.

HIPC assistance as amended at the completion point. NPV figures calculated using end-1999 parameters.

NPV of debt after assuming a stock-of-debt operation on Naples terms at the end-1999 and at least comparable treatment by non-Paris Club and commercial creditors.

Exports of goods and non-factor services.

Assuming unconditional delivery at end-1999 and applied to the stock of debt outstanding as of end-1999.

Assuming unconditional delivery at end-2005 and applied to the stock of debt outstanding as of end-2005.

Includes debt relief beyond HIPC initiative assistance provided by most of the Paris Club creditors on a voluntary basis.

Table 13.Malawi: Sensitivity Analysis, 2005 - 2025 1/

(In percent; unless otherwise indicated)

2005200620072008200920102011201220132014201520162017201820192020202120222023202420252006–20152016–2025
ProjectionsAverages
Baseline scenario
NPV of debt-to-exports ratio 2/363.743.049.354.460.566.170.572.874.576.377.879.180.982.884.385.786.887.688.288.588.864.585.3
Debt service-to-exports ratio 2/7.20.91.01.11.21.41.92.32.22.22.11.81.71.82.02.12.22.32.42.52.12.1
Debt service-to-revenue ratio 3/8.11.01.11.21.31.52.12.52.52.52.32.12.02.22.32.52.62.82.93.02.42.5
Memorandum items (in millions of U.S. dollars):
NPV of debt1,887.2242.3298.2345.8397.3456.7520.3581.8642.8710.1780.2855.2943.21,040.01,142.51,251.21,366.21,487.01,613.51,746.01,886.6497.61,333.1
Of which: new debt59.3116.0165.0218.3278.9346.6414.7482.9555.6633.1715.7807.2907.81,014.51,127.71,246.91,372.01,503.41,641.51,788.0327.01,212.5
Debt service44.25.76.57.68.611.016.121.122.524.124.022.823.027.031.135.039.644.950.556.216.835.4
Of which: new debt1.11.92.73.54.35.111.015.516.517.618.817.717.721.425.329.634.138.944.149.77.929.7
Exports of goods and services, three-year average519.0563.6605.5635.9657.1691.0738.4799.6863.2930.51,003.11,081.31,165.71,256.61,354.61,460.21,574.11,696.91,829.21,971.92,125.6748.81,551.6
Exports of goods and services, annual565.7614.5636.2657.0678.1737.9799.2861.6928.81,001.21,079.31,163.51,254.21,352.01,457.51,571.11,693.71,825.81,968.12,121.62,287.1799.41,669.5
Revenues520.6537.0550.7595.9630.3679.6729.3778.9831.8888.4948.81,013.31,082.21,155.71,234.31,318.21,407.91,503.61,605.81,715.01,831.6162.3173.3
Sensivity analysis
Scenario I: Less Concessional New Borrowing
NPV of debt-to-exports ratio 2/363.743.057.564.672.077.379.479.880.782.484.587.090.794.397.6100.6103.5106.4109.5113.0116.672.1101.9
Debt service-to-exports ratio 2/7.21.51.92.22.33.14.04.85.05.14.94.34.04.24.55.05.66.26.77.23.75.2
Debt service-to-revenue ratio 3/8.11.72.12.32.43.34.45.35.65.85.64.94.64.95.35.96.77.58.28.84.16.2
Memorandum items (in millions of U.S. dollars):
NPV of debt1,887.2242.3348.4410.6472.9534.3586.2638.2696.4767.1847.6940.51,057.01,184.81,321.91,469.21,629.31,805.22,003.42,227.52,478.5554.41,611.7
Of which: new debt59.3166.2229.8293.9356.4412.6471.1536.5612.5700.4801.0921.01,052.71,193.91,345.71,510.01,690.21,893.32,123.02,379.9383.91,491.1
Debt service44.29.712.414.816.724.534.744.650.455.257.353.754.160.870.884.3102.2121.5141.8163.730.791.0
Of which: new debt1.15.98.510.712.418.629.639.044.448.852.148.648.855.365.078.896.7115.6135.5157.221.985.4
Exports of goods and services, three-year average519.0563.6605.5635.9657.1691.0738.4799.6863.2930.51,003.11,081.31,165.71,256.61,354.61,460.21,574.11,696.91,829.21,971.92,125.6748.81,551.6
Exports of goods and services, annual565.7614.5636.2657.0678.1737.9799.2861.6928.81,001.21,079.31,163.51,254.21,352.01,457.51,571.11,693.71,825.81,968.12,121.62,287.1799.41,669.5
Revenues520.6546.2555.6601.9636.9686.7736.9787.0840.5897.6958.71,023.91,093.51,167.81,247.21,332.01,422.61,519.31,622.61,732.91,850.7724.81,401.3
Scenario II: Higher Borrowing and Weak Export Performance
NPV of debt-to-exports ratio 2/363.743.049.354.460.569.378.888.198.2110.0123.1137.9145.3152.9160.2167.1173.7179.9185.6191.0196.177.4169.0
Debt service-to-exports ratio 2/7.20.91.01.11.21.52.33.13.33.53.63.23.13.53.84.14.54.85.15.42.54.1
Debt service-to-revenue ratio 3/8.10.30.40.50.70.81.72.42.62.83.02.62.52.83.13.43.73.94.24.42.03.4
Memorandum items: (in millions of U.S. dollars):
NPV of debt1,887.2242.3298.2345.8397.3474.2565.7667.2781.8919.61,080.41,270.41,405.41,553.01,708.21,871.52,042.82,221.42,407.22,600.62,804.5577.21,988.5
Of which: new debt0.059.3116.0165.0218.3296.3392.0500.1621.9765.0933.21,130.91,269.31,420.81,580.21,748.01,923.52,106.42,297.12,496.12,705.9406.71,867.8
Debt service44.25.76.57.68.911.718.425.528.832.534.933.033.038.945.151.157.865.473.481.719.051.4
Of which: new debt1.11.92.73.54.65.813.320.022.826.029.827.927.733.439.345.652.359.567.175.210.145.8
Exports of goods and services, three-year average519.0563.6605.5635.9657.1684.6718.3757.5796.4836.0877.7921.4967.41,015.71,066.51,119.81,175.91,234.81,296.81,361.91,430.4713.31,159.1
Exports of goods and services, annual565.7614.5636.2657.0678.1718.7758.1795.8835.4877.0920.7966.61,014.91,065.61,118.91,175.01,233.81,295.71,360.81,429.21,501.1749.11,216.2
Revenues520.6546.2555.6601.9636.9683.4729.9775.8824.6876.4931.5990.11,052.41,118.61,188.91,263.61,343.11,427.61,517.31,612.71,714.1716.21,322.8
Scenario III: Periodic Droughts
NPV of debt-to-exports ratio 2/363.743.049.354.460.570.671.674.375.377.285.481.783.884.986.596.090.891.991.591.8100.966.290.0
Debt service-to-exports ratio 2/7.20.91.01.11.31.41.92.32.32.52.11.91.81.92.32.22.32.42.52.92.22.2
Debt service-to-revenue ratio 3/0.20.30.40.50.70.71.41.81.82.01.81.61.51.72.12.12.22.42.53.01.02.1
Memorandum items: (in millions of U.S. dollars):
NPV of debt1,887.2242.3298.2345.8397.3479.9517.5576.9635.3699.3817.5835.8918.31,008.61,103.71,294.61,309.71,419.81,534.41,653.71,920.9501.01,300.0
Of which: new debt0.059.3116.0165.0218.3302.0343.8409.8475.3544.8670.3696.3782.3876.5975.71,171.11,190.41,304.81,424.31,549.21,822.3330.51,179.3
Debt service44.25.76.57.69.011.016.020.822.225.223.522.322.426.132.133.737.942.848.057.216.834.6
Of which: new debt1.11.92.73.54.65.110.915.316.218.718.317.217.120.626.328.232.436.941.650.68.028.9
Exports of goods and services, three-year average519.0563.6605.5635.9657.1680.1722.4776.9843.2905.5956.81,023.51,095.31,187.91,275.71,348.01,443.21,545.41,677.21,801.11,903.2734.71,430.0
Exports of goods and services, annual565.7614.5636.2657.0678.1705.2783.8841.7903.9970.7995.61,104.31,185.91,273.51,367.61,402.71,559.11,674.41,798.11,931.01,980.5778.71,527.7
Revenues520.6546.2555.6601.9636.9673.7731.5778.2827.9880.8919.1996.61,060.31,128.11,200.21,252.31,358.61,445.41,537.81,636.01,707.1715.21,332.2
Scenario IV: Scaling up of Aid
NPV of debt-to-exports ratio 2/363.743.049.354.460.574.296.1114.9120.1124.9129.1132.9137.2141.5145.2148.5151.2153.4155.1156.3157.286.6147.8
Debt service-to-exports ratio 2/7.20.91.01.11.31.72.93.63.63.53.43.02.73.03.33.53.73.94.04.22.73.5
Debt service-to-revenue ratio 3/0.20.30.40.50.71.12.53.33.33.33.32.92.73.13.43.84.14.34.64.91.63.7
Memorandum items: (in millions of U.S. dollars):
NPV of debt1,887.2242.3298.2345.8397.3513.0710.0920.51,041.51,173.61,313.91,464.91,637.91,829.52,033.82,252.02,484.12,729.52,988.73,262.63,555.0695.62,423.8
Of which: new debt59.3116.0165.0218.3335.2536.4753.4881.61,019.11,166.81,325.31,501.91,697.31,905.82,128.52,364.82,614.52,878.63,158.03,456.4525.12,303.1
Debt service44.25.76.57.69.513.825.233.936.339.040.138.138.445.853.661.570.480.591.2102.622.262.2
Of which: new debt1.11.92.73.55.28.020.028.330.332.534.933.033.140.247.856.165.074.684.996.013.356.6
Exports of goods and services, three-year average519.0563.6605.5635.9657.1691.0738.4800.9867.5939.61,017.71,102.21,193.81,293.01,400.51,516.91,642.91,779.51,927.32,087.52,261.0751.71,620.5
Exports of goods and services, annual565.7614.5636.2657.0678.1737.9799.2865.7937.61,015.51,099.91,191.31,290.31,397.51,513.71,639.51,775.71,923.22,083.12,256.22,443.7804.21,751.4
Revenues520.6546.2555.6601.9636.9686.7736.9790.8848.6910.6977.21,048.61,125.21,207.51,295.81,390.51,492.11,601.21,718.31,843.91,978.6729.11,470.2
Sources: Malawian authorities; and staff estimates and projections.

All debt indicators refer to public and publicly guaranteed debt and are defined after delivery of MDRI and debt relief beyond HIPC assistance offered by some Paris Club creditors on a voluntary basis.

Exports of goods and services as defined in IMF, Balance of Payments Manual, 5fh edition, 1993. The NPV of debt-to-exports ratio is based on a three-year average of exports on the previous year; the debt-service ratio is based on current year exports.

Debt service-to-revenu e ratio is based on current central government revenues, excluding grants.

Sources: Malawian authorities; and staff estimates and projections.

All debt indicators refer to public and publicly guaranteed debt and are defined after delivery of MDRI and debt relief beyond HIPC assistance offered by some Paris Club creditors on a voluntary basis.

Exports of goods and services as defined in IMF, Balance of Payments Manual, 5fh edition, 1993. The NPV of debt-to-exports ratio is based on a three-year average of exports on the previous year; the debt-service ratio is based on current year exports.

Debt service-to-revenu e ratio is based on current central government revenues, excluding grants.

Table 14.Malawi: Delivery of IDA Assistance Under the Enhanced HIPC Initiative and the MDRI, 2000-20 1/

(In millions of U.S. dollars, unless otherwise indicated)

Average
2000200120022003200420052006200720082009201020112012201320142015201620172018201920202001–052006–43
ActualProjections
I. Relief under the Enhanced HIPC Initiative
Debt service before HIPC Assistance 1/28.130.534.337.941.042.449.755.357.463.666.169.072.175.776.777.579.880.880.183.783.435.756.9
Principal16.318.722.726.529.831.437.741.243.550.153.056.359.863.965.366.669.471.070.874.975.324.250.8
Interest11.911.711.611.411.211.012.014.113.813.513.112.712.311.811.310.810.39.89.38.78.211.56.1
IDA HIPC assistance 2/0.016.818.920.922.723.525.827.228.029.830.931.633.234.634.834.935.936.335.736.235.917.1
Debt service after HIPC assistance 1/28.113.715.417.018.318.927.228.229.433.835.237.438.941.141.842.643.944.444.447.547.618.644.1
Principal16.38.510.211.913.314.018.719.921.325.827.429.831.534.035.036.037.638.438.642.142.512.439.8
Interest11.95.25.25.15.04.98.58.38.18.07.87.67.37.16.86.66.36.05.75.45.16.24.3
IDA HIPC assistance with possible topping-up at completion point 3/0.00.00.00.00.00.029.147.749.554.957.059.562.265.366.166.868.869.769.172.272.0
Debt service after topping up 1/28.113.715.417.018.318.920.77.67.98.79.19.59.910.410.510.611.011.111.011.511.518.633.0
II. Relief under the MDRI 4/
Projected stock of IDA credits outstanding at implementation date 5/1,908.0
Remaining IDA credits after MDRI debt relief103.6
Without possible topping up
Debt stock reduction on eligible credits 6/1,804.4
Due to HIPC relief 7/423.2
Due to MDRI1,381.1
Debt service due after HIPC relief and the MDRI18.50.81.01.31.51.71.62.12.62.82.82.83.03.23.43.7
With possible topping up
Debt stock reduction on eligible credits at the completion point1,804.4
Due to HIPC relief 7/391.6
Due to Topping-up345.0
Due to MDRI1,067.7
Debt service due to IDA after HIPC relief, topping up and MDRI18.30.60.30.40.40.40.20.70.70.60.40.40.50.70.72.9
Memorandum Item:
Debt service to IDA covered by HIPC assistance as approved at decision point (in percent) 8/55.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.355.3
Debt service to IDA covered by HIPC assistance revised at completion point (in percent) 8/55.355.355.355.355.355.355.955.955.955.955.955.955.955.955.955.955.955.955.955.955.955.355.9
Debt service to IDA covered by HIPC assistance with possible topping-up (in percent) 9/55.355.355.355.355.355.386.386.386.386.386.386.386.386.386.386.386.386.386.386.386.355.386.3
Debt service to IDA covered by HIPC assistance and MDRI (in percent) 9/55.355.355.355.355.355.365.198.598.398.097.797.697.797.296.696.496.596.596.396.195.955.385.2
Debt service to IDA covered by HIPC assistance, topping-up and MDRI (in percent) 9/55.355.355.355.355.355.365.598.999.599.399.499.599.799.199.099.299.599.599.399.299.255.386.1
IDA debt service relief under the MDRI 10/9.128.529.333.334.536.538.139.940.240.742.042.642.445.345.240.8
IDA debt service relief under the MDRI with possible topping-up 10/2.99.79.110.110.510.911.512.012.112.212.512.712.613.213.130.7
Source: IDA staff estimates.

Debt service till end-September 2006 is estimated on debt outstanding as of December, 1999. From October 2006 onwards, principal and interest due to IDA correspond to prorated projections on disbursed and outstanding debt as of end-December 2005, converted to U.S. dollars using the exchange rate as of end-December 2005.

Enhanced HIPC assistance till September 2006 as approved by the Board of IDA at the decision point. (IDA/R2000-234, 12-21-2000). After October 2006, HIPC assistance based on revised schedule which is subject to the IDA approval of revision of HIPC assistance to Malawi.

Subject to IDA Board approval of topping-up assistance at the completion point.

Stock of debt and debt service denominated in SDRs are converted into U.S. dollar by applying the end-2005 exchange rate.

Stock of debt outstanding on September 30, 2006.

Debt disbursed as of December, 31 2003 and still outstanding at the end of FY06.

HIPC relief is assumed to proportionally reduce repayments of principal and charges on IDA credits disbursed as of end-December 2003 and still outstanding as of September, 30 2006.

Based on debt disbursed and outstanding as of end-1999.

Based on debt disbursed and outstanding as of end-2005.

For SDR denominated credits, debt relief under the MDRI is estimated as debt service on SDR denominated credits minus USD-based HD?C debt relief on these credits. HIPC debt relief is converted into SDR equivalent amounts using the following exchange rates: i) for costs during FY07 and FYO8, by applying the foreign exchange rate of 1.5104 resulting from the hedging of donor contributions to cover HIPC costs during IDA 14; (ii) for costs from FY09 onwards, by applying the foreign exchange rate of 1.47738 agreed by donors under the latest regular IDA replenishment. For USD denominated creditors, debt relief under the MDRI is estimated as debt service on USD denominated credits minus USD-based HIPC debt relief on these credits. The resulting MDRI debt relief amounts are converted into SDR equivalent amounts by applying the foreign exchange reference rates agreed by donors under the latest regular IDA replenishment.

Source: IDA staff estimates.

Debt service till end-September 2006 is estimated on debt outstanding as of December, 1999. From October 2006 onwards, principal and interest due to IDA correspond to prorated projections on disbursed and outstanding debt as of end-December 2005, converted to U.S. dollars using the exchange rate as of end-December 2005.

Enhanced HIPC assistance till September 2006 as approved by the Board of IDA at the decision point. (IDA/R2000-234, 12-21-2000). After October 2006, HIPC assistance based on revised schedule which is subject to the IDA approval of revision of HIPC assistance to Malawi.

Subject to IDA Board approval of topping-up assistance at the completion point.

Stock of debt and debt service denominated in SDRs are converted into U.S. dollar by applying the end-2005 exchange rate.

Stock of debt outstanding on September 30, 2006.

Debt disbursed as of December, 31 2003 and still outstanding at the end of FY06.

HIPC relief is assumed to proportionally reduce repayments of principal and charges on IDA credits disbursed as of end-December 2003 and still outstanding as of September, 30 2006.

Based on debt disbursed and outstanding as of end-1999.

Based on debt disbursed and outstanding as of end-2005.

For SDR denominated credits, debt relief under the MDRI is estimated as debt service on SDR denominated credits minus USD-based HD?C debt relief on these credits. HIPC debt relief is converted into SDR equivalent amounts using the following exchange rates: i) for costs during FY07 and FYO8, by applying the foreign exchange rate of 1.5104 resulting from the hedging of donor contributions to cover HIPC costs during IDA 14; (ii) for costs from FY09 onwards, by applying the foreign exchange rate of 1.47738 agreed by donors under the latest regular IDA replenishment. For USD denominated creditors, debt relief under the MDRI is estimated as debt service on USD denominated credits minus USD-based HIPC debt relief on these credits. The resulting MDRI debt relief amounts are converted into SDR equivalent amounts by applying the foreign exchange reference rates agreed by donors under the latest regular IDA replenishment.

Table 15a.Malawi: Delivery of IMF Assistance under the HIPC Initiative and the MDRI (without possible topping-up), 2000-2009 1/

(In millions of SDRs, unless otherwise indicated)

2000200120022003200420052006200720082009
Jan–AugSep–Dec
ActualProjection
I. Pre-MDRI Debt relief (under the HIPC Initiative only)2/
HIPC-eligible Debt Service due on IMF obligations 3/0.16.26.27.79.610.84.68.713.95.84.5
Principal0.05.55.77.29.210.24.38.613.45.44.1
Interest0.10.70.50.40.40.60.20.20.50.50.4
HIPC assistance--deposits into the HIPC Umbrella Account
Interim assistance2.34.64.6
Completion point disbursement15.4
Completion point assistance 4/11.7
Completion point interest3.7
HIPC assistance--drawdown from the HIPC Umbrella Account0.02.30.01.82.82.62.14.49.41.80.4
IMF assistance without interest0.02.30.01.82.82.52.13.28.00.30.3
Estimated interest earnings 5/0.00.00.00.00.00.00.01.21.41.50.1
Debt service due on IMF obligations after HIPC assistance0.13.86.25.96.88.22.44.44.54.04.2
Delivery schedule of IMF assistance (in percent of total assistance; on a flow basis)0100812119143411
Share of debt service due on IMF obligations covered by
HIPC assistance (in percent)0.037.60.523.429.523.846.850.267.530.98.2
Proportion (in percent) of each principal repayment obligation falling due during the0.042.40.078.350.149.948.137.059.55.57.1
period to be paid by HIPC assistance from the principal deposited in Umbrella Account 6/
II. Post-MDRI Debt relief (under both MDRI and HIPC Initiatives)
Projected pre-cutoff date debt at completion point37.9
Delivery of debt relief (on stock basis):37.9
from the MDRI-I Trust 7/22.4
from the HIPC Umbrella Account15.4
III. Debt service due to the IMF after HIPC and MDRI debt relief 8/0.10.40.40.4
Memorandum items:
(Based on debt service data and exchange rates as of end-2005)
Debt service due on IMF obligations (in millions of U.S. dollars) 9/0.20.60.60.6
Debt service due on current IMF obligations after IMF assistance 10/0.25.58.88.49.711.83.56.26.55.86.0
(in percent of exports) 11/0.01.21.91.82.02.31.22.21.10.90.9
Source: Fund staff estimates.

Total IMF assistance under the HIPC Initiative is SDR 23.3 million calculated on the basis of data available at the decision point, excluding interest earned on Malawi’s account and on committed but undisbursed amounts, as described in footnote 5. The amount of IMF assistance committed at the decision point is adjusted upwards from SDR 23.14 million to SDR 23.3 million owing to data revisions.

Reflects the projected delivery of HIPC assistance in the absence of MDRI decision.

Data prior to completion point are as of end-October 2000. Forthcoming obligations after completion point are based on schedules in effect as of end-December 2005. Interest obligations include net SDR charges and assessments.

A final disbursement of SDR 11.73 million assumed to be deposited into Malawi’s Umbrella Account at the completion point in August 2006.

Includes estimated interest earnings on: (1) amounts held in Malawi’s account; and (2) up to the completion point, amounts committed but not yet disbursed. The projected interest earnings are estimated based on assumed interest rates which are gradually increasing to 4.5 percent in 2009; actual interest earnings may be higher or lower. Interest accrued on (1) during a calendar year will be used toward the first principal repayment obligation(s) falling due in the following calendar year except in the final year, when it will be used toward payment of the final obligation(s) falling due in that year. Interest accrued on (2) during the interim period will be used toward principal repayment obligations falling due during the three years after the completion point.

Proportions prior to completion point are actual proportions as approved by the Executive Board.

Credit outstanding at end-2004 that has not been repaid by the member or with HIPC assistance at the completion point and is not scheduled to be repaid by HIPC assistance, as defined in the MDRI-I Trust Instrument.

As of end-December 2005; reflecting obligations associated with disbursements made in 2005.

After IMF assistance under the HIPC Initiative and the MDRI.

After IMF assistance under the HIPC Initiative.

Three year moving average of exports of goods and services.