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Malawi - Fifth and Sixth Reviews Under the Extended Credit Facility Arrangement, Request for Waivers for Non-Observance of Performance Criteria, Extensions of the Arrangement, Modification of Performance Criterion, and Rephasing of Disbursements-Staff Report; Press Release; and Statement by the Executive Director for Malawi
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Malawi: Fifth and Sixth Reviews Under the Extended Credit Facility Arrangement, Request for Waivers for Non-Observance of Performance Criteria, Extension of the Arrangement, Modification of Performance Criterion, and Rephasing of Disbursements—Informational Annex

Author(s):
International Monetary Fund. African Dept.
Published Date:
March 2015
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Relations with the Fund

(As of December 31, 2014)

Membership Status

Joined: July 19, 1965; Article VIII

General Resources Account:

SDR Million%Quota
Quota69.40100.00
Fund holdings of currency (exchange rate)66.9696.69
Reserve tranche position2.443.52

SDR Department:

SDR Million%Allocation
Net cumulative allocation66.37100.00
Holdings6.559.86

Outstanding Purchases and Loans:

SDR Million%Quota
ESF Arrangements27.7640.00
ECF Arrangements93.97135.41

Latest Financial Arrangements:

TypeDateExpirationAmountAmount
of ArrangementDateApprovedDrawn
(SDR Million)(SDR Million)
ECF07/23/201207/22/2015104.1052.06
ECF1/02/19/201007/22/201252.0513.88
ESF12/03/200812/02/200952.0534.70

formerly PRGF.

formerly PRGF.

Projected Payments to Fund1(SDR Million; based on existing use of resources and present holdings of SDRs):
Forthcoming
20152016201720182019
Principal17.3517.8615.7120.4111.89
Charges/Interest0.030.030.060.040.14
Total17.3817.8915.7720.4512.03

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative:

Enhanced Framework
Commitment of HIPC assistance
Decision point dateDecember 2000
Assistance committed
by all creditors (US$ Million)11,057.00
Of which: IMF assistance (US$ million)45.27
(SDR equivalent in millions)33.37
Completion point dateAug 2006
Disbursement of IMF assistance (SDR Million)
Assistance disbursed to the member33.37
Interim assistance11.57
Completion point balance21.80
Additional disbursement of interest income23.82
Total disbursements37.19

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Implementation of Multilateral Debt Relief Initiative (MDRI):

MDRI-eligible debt (SDR Million)137.87
Financed by: MDRI Trust14.53
Remaining HIPC resources23.34
Debt Relief by Facility (SDR Million)
Eligible Debt
Delivery DateGRAPRGFTotal
December 2006N/A7.917.91
September 200610.8419.1229.96

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

Safeguards Assessments:

An update safeguards assessment of the Reserve Bank of Malawi (RBM) with respect to the 2012 ECF was completed on December 27, 2012. The assessment reiterated the key safeguards concern – the lack of operational autonomy - and recommended that already envisaged amendments to the RBM Act to limit lending to government be expanded to strengthen RBM autonomy more broadly. The assessment also reiterated the need to enhance oversight of foreign reserves management along with measures to strengthen transparency of financial reporting.

Exchange Arrangements:

In 2006 the Fund determined that Malawi maintains a multiple currency practice (MCP) inconsistent with Article VIII, Section 3, due to a spread of more than 2% between the exchange rates of commercial banks and the rates of foreign exchange bureaus. At that time, the Fund determined that the spread resulted from official action by RBM, through informal limitation on the availability of foreign exchange and moral suasion on commercial banks.

In May 2012, the government liberalized the foreign exchange regime, devalued the kwacha by about 33 percent, and adopted a floating exchange rate regime. Since May 2012, the RBM has not set a target rate and allowed substantial volatility in the exchange rate, including recent depreciation to around MK 473.7 per U.S. dollar at end-December 2014. Official actions continue to play a role in influencing the exchange rate, but the exchange rate movements are largely market determined. Therefore, the de jure (as well as de facto) exchange rate arrangement was reclassified to floating from other managed arrangement.

Article IV Consultation:

Malawi is on a 24-month Article IV consultation cycle. The last Article IV Consultation mission was conducted in conjunction with the discussions on the new ECF-supported program arrangement in May/June 2012. The Executive Board concluded the last Article IV consultation with Malawi on July 23, 2012.

Financial Sector Assessment Program (FSAP), Reports on Observance of Standards and Codes (ROSCs), and Offshore Financial Center (OFC) Assessments:

A joint team of the World Bank and the International Monetary Fund visited Malawi under the FSAP program during two missions in July and December 2007. The Financial System Stability Assessment (FSSA) was issued in June 2008.

Corporate Governance and Accounting and Auditing ROSC missions visited Malawi in February and June 2007.

An update on the FAD mission on the fiscal transparency module was issued in March 2007. A ROSC on the data module, based on a September 2003 mission, was published in October, 2004.

Technical Assistance:

Date of DeliveryDepartmentMinistry/AgencyPurpose/TopicModality
11/14STANSOAssistance with redeveloping dataMission
11/14FADMinistry of FinancePFM Action Plan follow-upMission
09/14STANSODevelopment of direct prices survey forMission
MPIs
03/14STANSOFurther Assistance on DataMission
Improvement
03/14FADMinistry of FinancePFM Reform ProgramMission
11/13STANSOBalance of Payments StatisticsMission
09/13STANSOPrice StatisticsMission
03/13FADMinistry of FinancePublic Financial ManagementMission
02/13STARBMRBMS’ monetary statisticsMission
02/13FADMinistry of FinanceGFS 2001Mission
11/12STANSOPrices StatisticsMission
10/12MCMRBMLiquidity Management, MonetaryMission
Operations and Related Issues
10/12FADMinistry ofRevenue AdministrationMission
Finance/MRA
05/12STANSOConsumer Price Indices MissionMission
04/12STANSOBalance of Payments StatisticsMission
04/12STANSOProvide advice to improve the GDPMission
methodology and assist with improving
the data sources and indicators
04/12STANSOBalance of Payments and InternationalMission
Investment Position Statistics
03/12FADMinistry of FinanceStrengthening the IFMIS controlMission
environment
03/12FADMinistry of FinancePublic Financial Management (PFM)Report
Reforms
03/12FADMinistry ofFollow-up and ConsolidatingMission
Finance/MRAHeadquarters functions and Customs
Risk Management Mission
01/12MCMRBMReview of Implementation of Risk BasedReport
Supervision
01/12FADMinistry of FinanceDeveloping a Draft Budget FrameworkMission
Document (BFP)
12/11FADMinistry of FinancePublic Financial Management (PFM)Mission
Reforms
12/11MCM/LEGRBMReview the Foreign Exchange RegimeMission
11/11FADMinistry of FinanceMacro fiscal trainingMission
11/11MCMRBMDevelopment of asset managementMission
manual.
11/11MCMRBMFurther Development of a FrameworkReport
for Consolidated Supervision
11/11FADMinistry of FinanceImproving capacity in Business processMission
re-engineering and IT implementation.
10/11FADMinistry of FinanceProgram Budgeting and Developing theMission
Medium-term Expenditure Framework
Cycle
06/11FADMinistry of FinanceMeasures for Tax Reform and TaxationMission
of Mining
06/11FAD/MRAMinistry of FinanceEnhancing taxpayer compliance andMission
revenue performance
06/11STAMinistry of FinanceGovernment Finance StatisticsReport
06/11FADMinistry of FinanceMacro-fiscal training, scoping and needsMission
assessment
06/11MCMRBMDeveloping AML/CFT OffsiteMission
Supervisory Tools and Practices
06/11FADMinistry ofMalawi: Enhancing Tax Compliance andReport
Finance/MRARevenue Performance
06/11FADMinistry ofTax AdministrationMission
Finance/MRA
06/11FADMinistry of FinanceMeasures for Tax Reform and theMission
Taxation of Mining
05/11FADMinistry of FinanceFixed Assets and Financial ReportingMission
05/11FADMinistry ofReport on Strengthening HeadquartersMission
Finance/MRAfunctions and Customs Risk
Management Mission
04/11STANSOIncorporate new source data in theMission
balance of payments and develop new
worksheets
04/11MCMRBMAssisting Reserve Bank of Malawi toMission
further develop a framework for
consolidated supervision
04/11MCMRBMDeveloping Capacity for Stress Testing -Report
Mission Report to the Reserve Bank of
Malawi
02/11STANSOAssess SUT and B-I prerequisites, dataMission
sources, compilation and dissemination
for NAS
02/11STANSOReview of National Accounts StatisticsReport
01/11FADMinistry of FinanceStreamlining Budget Documentation,Mission
Revising Budget Circular, Reintroducing
MTEF
11/10FADMinistry of FinanceIntegrated Financial ManagementReport
Information System (IFMIS): Review And
Implementation Strategies
11/10STARBMMonetary and Financial StatisticsMission
11/10MCMRBMRegulation and Oversight of MobileMission
Payments and Related Issues
10/10STANSOAssist in reviewing and modifying theMission
PPS and PPI.
10/10FADMinistry of FinanceIFMIS/Cash ManagementMission
10/10FADMinistry of FinanceProgram Budgeting/Output BudgetingMission
10/10FADMinistry of FinanceIn-year Fiscal Reporting/BudgetMission
Documentation
10/10FADMinistry of FinanceJoint review of PFMRPMission
10/10FADMinistry of FinanceStrengthening Program Budgeting,Report
Performance Measurement, and Budget
Documentation.
08/10FADMinistry of FinanceRevenue Policy and AdministrationReport
07/10FADMinistry of FinanceStrengthening the large taxpayers officeMission
07/10FADMinistry of FinanceInstallation of expert andMission
revenue Administration follow
up mission (including review
of ITAS implementation)
07/10STANSOImplementation of Balance of PaymentsMission
Standards
07/10STANSOBalance of Payments and InternationalReport
Investment Position Statistics
06/10FADMinistry of FinanceIssues in Tax Policy and Taxation ofMission
Mining
05/10MCMRBMTraining in Techniques of Stress TestingReport
of Prudential Data
05/10FADMinistry of FinanceRevenue Policy and AdministrationReport
01/10FADMinistry of FinanceOutput-based budget and expenditureMission
tracking
01/10STANSOBalance of payments statisticsMission
10/09MCMRBMCentral bank policyMission
10/09MCMRBMCentral bankingMission
09/09FADMinistry of FinanceImproving output budgetingMission
08/09LEGMinistry of FinanceTax procedure codeMission
05/09LEGMinistry of FinanceTax procedure codeMission
05/09FADMinistry of FinanceLinkage between policy and budgetaryMission
allocations
04/09FADRBMMonetary operations and reservesMission
management
03/09FADMinistry of FinanceRevenue administrationMission
03/09FADMinistry of FinancePrepare modernization plan andMission
support tax administration
02/09FADMinistry of FinanceIntegration of accounting systems andMission
fiscal reporting
02/09MCMRBMCurrency handling and reformMission
02/09MCMRBMMonetary operations/money marketsMission
01/09STARBMDFID: Money and banking statisticsMission
01/09MCMRBMMonetary operations/money marketsMission
01/09MCMRBMMacro and FSI AnalysisMission
01/09MCMRBMTA coordination/evaluationMission

Joint Managerial Action Plan

(January 12, 2015)

TitleProductsProvisional Timing of MissionsExpected Delivery Date
A. Mutual information on relevant work programs
Bank work program in the next 12 monthsAnalytical and Advisory Activities:
1. MW-DRMOn-goingOctober, 2016
2. Malawi Capacity Procurement BuildingOn-goingOctober, 2015
3. MW - Gender Policy NotesFebruary, 2015March, 2015
4. Malawi Policy Note SeriesOn-goingFebruary 2015
5. Malawi Primary Education PET-QSD studyFebruary, 2015April, 2015
6. Malawi Urbanization ReviewJanuary, 2015March 2015
7. Renewable Energy Resource MappingOn-goingSeptember, 2017
9. Growth and CompetitivenessJanuary, 2015December 2015
10. Malawi Economic Monitor (MEM)Dec ‘14/Jun ‘15Jan/Jul 2015
Lending:
1. Ag. Commercialization & Rural GrowthApril 2015September, 2015
2. Malawi: EITI Implementation SupportMay, 2015July, 2015
3. MW: Shire Valley Irrigation Project.August 2015December 2015
4. Project to Improve Public Finance and Economic ManagementAugust, 2015February 2016
5. Fiscal Management Development Policy OperationOngoingOctober 2015
IMF work program in next 12 months1. Fifth review of ECF-supported programFebruary 2014April 2014
2. Sixth review of ECF-supported programJuly/Aug 2014October 2014
B. Requests for work program inputs
Fund request to Bank1. Updates on WB support to MalawiContinuous
Bank request to IMF1. Regular updates and exchange of views on medium-term macro projections including sharing detailed excel tables on Real, Monetary, Fiscal and External SectorsContinuous
C. Agreement on joint products and missions
Joint products in next 12 months1. Debt Sustainability Analysis (update)December 2014Feb/March, 2015

Relations with the African Development Bank Group

(As of December 31, 2014)

AfDB operations in Malawi date back to 1969. The Malawi Field Office was opened in 2007 and officially launched in July 2008 by AfDB President Dr. Donald Kaberuka. As at December 31, 2014, the Bank had provided significant and diversified support to Malawi, with cumulative commitments worth UA 852.8 million (about US$ 1.3 billion) to finance 100 operations including 12 studies and 2 lines of credit.

The AfDB Board of Directors on 30th January 2013 approved a new Country Strategy Paper (CSP) covering 2013–17. The Bank’s current CSP is fully aligned to the second Malawi Growth and Development Strategy (MGDS II) covering the period 2011–16, the Bank’s corporate priorities in the Long Term Strategy (LTS, 2013–22) and the Regional Integration Strategy Paper for Southern Africa (Southern African RISP, 2011–15). The CSP, which is under implementation, focuses on two pillars: (i) addressing infrastructure bottlenecks to competitiveness and growth; and (ii) supporting actions to expand private sector investment and trade. To ease challenges posed by Malawi’s landlocked position, the Bank has scaled-up support to regional infrastructure to deepen the country’s integration with its neighbors. Accordingly, more than 50 percent of the indicative lending operations are regional and will be financed with ADF, XIII and XIV resources. The Bank will also support Public Private Partnerships (PPPs) in infrastructure development. The CSP mid- term review will be undertaken in 2015.

Following Governments reengagement with the IMF and the approval of a new US$ 157 million Extended Credit Facility (ECF) arrangement for Malawi in July 2012, the Bank approved a new ADF Grant for the Crisis Response Budget Support operation for Malawi in July 2012, in the amount of UA 26 million (US$ 40 million). The Bank designed a Restoration of Fiscal Stability and Social Protection (RFSSP) program whose objective is to contribute to restoring fiscal stability and enhancing public finance management in Malawi, as well as support social protection measures to mitigate the adverse social impact of the devaluation of the Kwacha and the increases in fuel and electricity prices. In order to support this agenda, the RFSSP has two components: (i) strengthened PFM transparency and accountability, and (ii) strengthened social protection system. The Bank disbursed UA 4 million (US$ 6 million) as additional budgetary support in June 2013. The Bank has completed appraisal of the Protection of Basic Services Program of US $ 30 million, which is expected to be presented for Board approval, the first quarter of 2015. This Sector Budget Support program is designed to protect critical expenditures in health, education and social protection and improve accountability following suspension of general budget support.

Box. AfDB Ongoing Operations.

The Bank’s ongoing operations comprise the following: three projects in the agriculture sector: (i) Agriculture Infrastructure Support Project (AISP); (ii) Small-holder Irrigation and Value Addition Project and (iii) Climate Adaptation for Rural Livelihoods and Agriculture Project (grant from Global Environment Facility). The Bank is also financing through the African Water Facility (AWF) grants the Water Sector Monitoring & Evaluation Strengthening Project and the Water and Sanitation Access project for the Urban Poor in the City of Blantyre which is aimed at improving access to improved water supply and sanitation services. There are currently three projects providing support to the social sector and for economic empowerment (i) the the Local Economic Development project is developing infrastructure in four rural growth centers of Jenda, Malomo, Monkey Bay and Chitekesa; (ii) the Competitiveness and Job Creation Project in Private sector which aims to improve the capabilities and the competitiveness of the private sector as well as increase export diversification and job creation ; and (iii) Support to Higher Education Science & Technology Project aims to increase access to technical, entrepreneurship, vocational and training (TEVET) and higher education in Malawi, with particular emphasis to Information and Communication Technology (ICT). In the transport sector the Bank is supporting the Trunk Roads Rehabilitation Project which includes Blantyre-Zomba road rehabilitation project (60 km) and the Lilongwe Bypass construction Project (13km) as part of the Multinational Nacala Road Corridor. As at the end of December 2014, the overall portfolio was rated satisfactory with an average disbursement rate of 29% In line with the CSP indicative program, the Bank approved four new operations in 2013, the Mzuzu-Nkhata Bay Road Rehabilitation Project (US$ 33.20m), Smallholder Irrigation and Value Addition Project (US$39.98m) funded by Global Agriculture and Food Security Project and the African Development Fund, the multinational Nacala Road Corridor Development Project Phase IV (US$65.9m) and the Public Finance Management Institutional Support Project (about US $ 4.5 million). The PFM Project, which the Board approved in October, 2013, is supporting the Government of Malawi in implementing its five-year Public Finance and Economic Management Reform Program (PFEMRP) through improved tax administration and procurement systems. In April, 2014, the Board also approved Phase II of the National Water Development Programme (about US $ 35 million).

The Bank has also provided support for non-lending activities, including feasibility studies and analytic work to inform the design of new operations and policy dialogue. During 2012–2013 the Bank prepared a Private Sector Profile for Malawi and has also financed jointly with the World Bank and other partners a Public Expenditure Review. In addition, the Bank is supporting the Private Public Partnership Commission (PPPC) with a grant to implement the Capacity Building and Assessment of the Legislative and Institutional Framework for PPPs in Malawi. The Bank also undertook the Domestic Resource Mobilization Study for Malawi in 2013/2014 and provided TA to the Reserve Bank of Malawi to strengthen capacity in macro-economic forecasting.

Statistical Issues

Malawi—STATISTICAL ISSUES APPENDIX

As of February 2015

I. Assessment of Data Adequacy for Surveillance
General: Although economic data provision has some shortcomings, it is broadly adequate for surveillance.
National Accounts: National accounts estimates are produced with a two-year lag due to untimely source data. However, progress has occurred on improving methodology, in collaboration with a Norway-funded project. East AFRTAC has been assisting with the development of quarterly national accounts, including improvements to a monthly index of industrial production. Staff resources remain insufficient
Price Statistics: A consumer price index (CPI) is available on a timely basis. The CPI base is 2012, drawing on the 2010/11 Integrated Household Survey; and data (on urban and rural price indices) are collected on a monthly basis by regional price collectors. A 2013 East AFRTAC TA mission began the development of import and export price indexes (for which additional resources are needed) and a review of the new producer price index.
Government Finance Statistics: The accuracy and reliability of the data are affected by inadequate source data. A key shortcoming in this area is inadequate system of recording source data. In addition, there are serious quality problems, including data discrepancies, that complicate program monitoring:
• While tax revenue data are received in a timely fashion, it is not always possible to reconcile them with deposits in the Malawi Government (MG) Account.

• Nontax revenue, including capital revenues collected by line ministries are not properly accounted for in the fiscal reports prepared by the Ministry of Finance.

• Data on recurrent expenditure suffer from shortcomings partly related to insufficient bank reconciliation between expenses records prepared by line ministries and financing information prepared by the Ministry of Finance. Line ministries submit spending reports to the Ministry of Finance based on recorded expenses, while the Ministry of Finance estimates expenses based on funding data (from the Credit Ceiling Authority). At times, there are sizable discrepancies between these two sources of data for both wages and other recurrent transactions—to some extent reflecting the widespread practice of reallocation across budget lines.

• Domestically financed development expenditure estimates are based on funding released to line ministries, and estimates on externally funded expenditure are based on reported project grants and loans. Owing to differences in timing and financing modalities (e.g., some donors require prefinancing of expenditure before reimbursement), there are substantial differences between the flow of expenses and corresponding financing data. In addition, many donor projects are still not incorporated in the budget, and hence the corresponding expenditure is not captured in government finance statistics. Some externally funded development expenditures are likely recurrent and reported capital expenditure therefore overstated.

• Data on expenditure arrears are likely incomplete, as reporting from the Commitment Control System appears to be only partial, and ministry level data are not consistent from report to report.

• Malawi’s current budget classification includes economic and program classification and program, but does not include an effective administrative/organizational classification.1 Expenditure data is loosely mapped to functional classification based on the classification of functions of government (CoFoG) classification.

• The budget classification and chart of accounts may be adequate for some administrative, economic, functional, and program classifications. An output-oriented activities-based budget classification (ABB) is used for the presentation of the budget. However, pro-poor expenditures that have been protected in line with the PRSP are only identified in the ABB classification. As no bridge table exists to map the ABB classification into the program classification used for expenditure reporting and accounting, pro-poor expenditures cannot be monitored. Under the ECF program, the government is expected to develop a mechanism for properly monitoring social expenditures.

• The government nomenclature program/subprogram currently used for the functional classification seems appropriate considering the nature of the items classified under this group. The items currently classified under this group include functions, programs, and administrative levels. Although substantial elements of the current output-based budget structure appear to be predominately functional in nature, it is not clear whether they are cleanly linked to CoFoG. As such, the government should review the current budget structure and the functional classification based on CoFoG (GFSM2001) to verify that they are aligned.

• The absence of a financial administrative structure, complete with vertical hierarchy of responsibilities inhibits the use of Government Finance Statistics (GFS). Budget funds are directed to organizations generally defined as cost centers (e.g., headquarters of ministries down to the level of secondary school principals). As such, there does not appear to be an effective hierarchal financial system. However, to be clear, over the past two years, sub-votes have been introduced to a number of Ministries, but not as yet, a system of warrants and sub-warrants have not been introduced.

• Financing estimates are based on monetary and debt data, rather than on government records of financing. Reporting on treasury bills directly issued to the RBM at times has been slow.

• The authorities have received significant technical assistance from the Fund and other donors to strengthen expenditure monitoring and reporting, accounting, and statistical reporting, but results have lagged. The government has pledged to strengthen public financial management and fiscal reporting, and renewed efforts are being made to establish a work plan, including utilizing donor technical assistance more effectively. The authorities are currently working with East AFRITAC to modify its chart of accounts and output-based structures so that they could more easily be realigned to the national strategy and can be readily understood.

• A GFS TA mission visited Lilongwe in June 2011 in the context of the country’s participation in the GFS Module under the Enhanced Data Dissemination Initiative funded by DFID. It found that annual and sub-annual data for budgetary central government are compiled in GFSM 1986 format of the Ministry of Finance, but are not disseminated. A new chart of accounts aligned with the GFSM 2001 was introduced in the 2011–12 budget cycle, which applies to all general government units. A number of source data issues were identified and recommendations made to address them. Bridge tables linking the national classifications and GFSM 2001 classifications were prepared by the mission, and should be revised and used to compile GFS in GFSM 2001 format. A follow up mission is included in the RAP for FY 2015. Government finance data are reported for publication in the Government Finance Statistics Yearbook (GFSY).
Monetary and Financial Statistics: The Reserve Bank of Malawi (RBM) has improved data reporting to the Fund. Monthly monetary and financial statistics (MFS) are reported to STA on a continuous basis. The 2013 and 2015 missions assisted RBM staff in developing the standardized report forms (SRFs) for the central bank accounts (1SR), other depository corporations (2SR), monetary aggregates (5SR), and financial soundness indicators (FSIs). The authorities are expected to begin reporting SRF-based MFS and FSI data to STA by end-2015.

The quality of the reported data has been improved. The RBM has revamped banks’ call report forms to include additional breakdowns of assets and liabilities by institutional sector. Repurchase agreements data that were originally reported in the ODCs balance sheet without any breakdowns by holding sector are now reported in a separate annex, which provides the necessary breakdowns of the holding sectors. Similarly, the annex on overdue and nonaccrual loans, leases, and other assets by sector, which was previously reported on a quarterly basis, is now reported on a monthly basis.

Despite this progress, MFS data are still in need of improvements in terms of financial institution coverage. The depository corporation survey (DCS) does not include data for one investment bank which accepts deposits included in broad money, thereby hampering the accuracy of the compiled data. The 2013 and 2015 missions recommended the inclusion of that bank in the DCS. These missions also recommended inclusion in the DCS of saving and credit cooperatives (SACCOs) and their parent body—Malawi Union of Saving and Credit Cooperatives (MUSCCO).
Financial sector surveillance: With regard to FSIs, Malawi currently does not report data to the Fund for dissemination on the Fund website.
External sector statistics: The balance of payments (BOP) statistics in Malawi are compiled by the Balance of Payments Section of the NSO and are prepared in close coordination with the Malawi National Accounts (NA). The estimates are largely based on survey data for private enterprises, trade statistics, banking data, and information from Government Departments. Some of the surveys collect balance of payments and NA data together. Malawi reports the BOP and IIP in the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) format, reasonably compliant.

The BOP Section collects data via three substantial surveys. The Foreign Private Capital (FPC) survey collects data, essentially for the financial account; the BOP survey collects services and primary income data; and the Non-Profit Institutions Serving Households (NPISH) survey collects secondary income and capital account data.

The achievement of the recommendations of the last TA missions (April 2012, November 2012, November 2013, and February 2014) depends on the maintenance of the funding and resources available to the BOP Section. The likely Government budget constraints over the coming years may make funding difficult to achieve. The constraints, especially after the Malawi “Cashgate” scandal, are severe.

The funding for the 2015 FPC survey (data for 2013 and 2014) has been agreed for this Spring/Summer, while there was no funding for the BOP and NPISH surveys in 2014.
II. Data Standards and Quality
Malawi is participating in the GDDS/PRSP and the monetary and financial statistics modules of the project. GDDS metadata have been posted on the Fund’s Dissemination Standards Bulletin Board (DSBB) since February 2007.Data ROSC was published on February 17, 2005.

Economic classifications were upgraded to GFS 2001 compatible framework in FY 2006/07.

Economic classifications were upgraded to GFS 2001 compatible framework in FY 2006/07.

Malawi: Tables of Common Indicators Required for Surveillance(As of January, 2015)
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of Publication7Memo Items:8
Data Quality—Methodological soundness9Data Quality—Accuracy and reliability10
Exchange RatesCurrentCurrentDDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities110/201401/2015MMM
Reserve/Base Money10/201401/2015MMMLO, LO, LNO, OLO, O, O, O, O
Broad Money10/201401/2015MMM
Central Bank Balance Sheet10/201401/2015MMM
Consolidated Balance Sheet of the Banking System10/201401/2015MMM
Interest Rates212/201401/2015MMM
Consumer Price Index12/201401/2015MMMO, LNO, O, OLNO, O, O, O, NA
Revenue, Expenditure, Balance and Composition of Financing3 - General Government410/201411/2014MMIO, LO, O, OO, LO, O, O, LNO
Revenue, Expenditure, Balance and Composition of Financing3- Central Government10/201411/2014MMI
Stocks of Central Government and Central Government-Guaranteed Debt510/201411/2014MMM
External Current Account Balance10/201411/2014AAAO, O, O, OLO, O, LO, O, O
Exports and Imports of Goods and Services10/201411/2014AAA
GDP/GNP10/201411/2014AAALO, LNO, LNO, LOLNO, LNO, LO, LO, LNO
Gross External Debt201411/2014MII
International Investment Position620102014III

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign and domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

Reflects the assessment provided in the data ROSC or the Substantive Update (published on March 10, 2004, and based on the findings of the mission that took place during May 8–21, 2003) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording, respectively, are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 9, except referring to international standards concerning, respectively, source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign and domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

Reflects the assessment provided in the data ROSC or the Substantive Update (published on March 10, 2004, and based on the findings of the mission that took place during May 8–21, 2003) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording, respectively, are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 9, except referring to international standards concerning, respectively, source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

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