Abstract
Ninth Review Under the Extended Credit Facility Arrangement and Request for Waivers for Nonobservance of Performance Criteria
Relations with the Fund
(As of April 30, 2017)
Membership Status
Joined: July 19, 1965; Article VIII
| General Resources Account: | ||
| SDR Million | %Quota | |
| Quota | 138.80 | 100.00 |
| Fund holdings of currency (exchange rate) | 136.36 | 98.24 |
| Reserve tranche position | 2.44 | 1.76 |
| SDR Department: | ||
| SDR Million | %Allocation | |
| Net cumulative allocation | 66.37 | 100.00 |
| Holdings | 3.00 | 4.53 |
| General Resources Account: | ||
| SDR Million | %Quota | |
| Quota | 138.80 | 100.00 |
| Fund holdings of currency (exchange rate) | 136.36 | 98.24 |
| Reserve tranche position | 2.44 | 1.76 |
| SDR Department: | ||
| SDR Million | %Allocation | |
| Net cumulative allocation | 66.37 | 100.00 |
| Holdings | 3.00 | 4.53 |
Outstanding Purchases and Loans:
| SDR Million | %Quota | |
|---|---|---|
| ESF Arrangements | 13.88 | 10.00 |
| ECF Arrangements | 135.86 | 97.88 |
| SDR Million | %Quota | |
|---|---|---|
| ESF Arrangements | 13.88 | 10.00 |
| ECF Arrangements | 135.86 | 97.88 |
Latest Financial Arrangements:
| Type | Date of Arrangement | Expiration Date | Amount Approved | Amount Drawn |
|---|---|---|---|---|
| (SDR Million) | (SDR Million) | |||
| ECF | 07/23/2012 | 06/30/2017 | 138.80 | 119.30 |
| ECF | 02/19/2010 | 07/22/2012 | 52.05 | 13.88 |
| ESF | 12/03/2008 | 12/02/2009 | 52.05 | 34.70 |
| Type | Date of Arrangement | Expiration Date | Amount Approved | Amount Drawn |
|---|---|---|---|---|
| (SDR Million) | (SDR Million) | |||
| ECF | 07/23/2012 | 06/30/2017 | 138.80 | 119.30 |
| ECF | 02/19/2010 | 07/22/2012 | 52.05 | 13.88 |
| ESF | 12/03/2008 | 12/02/2009 | 52.05 | 34.70 |
Overdue Obligations and Projected Payments to Fund 1
(SDR Million; based on existing use of resources and present holdings of SDRs):
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Principal | 11.69 | 20.41 | 11.89 | 13.80 | 18.44 |
| Charges/Interest | 0.21 | 0.30 | 0.30 | 0.30 | 0.30 |
| Total | 11.89 | 20.71 | 12.19 | 14.10 | 18.74 |
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Principal | 11.69 | 20.41 | 11.89 | 13.80 | 18.44 |
| Charges/Interest | 0.21 | 0.30 | 0.30 | 0.30 | 0.30 |
| Total | 11.89 | 20.71 | 12.19 | 14.10 | 18.74 |
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:
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 HIPC Initiative:
| Commitment of HIPC assistance | Enhanced Framework | ||||
| Decision point date | Dec 2000 | ||||
| Assistance committed | |||||
| by all creditors (US$ Million)1 | 1,057.00 | ||||
| Of which: IMF assistance (US$ million) | 45.27 | ||||
| (SDR equivalent in millions) | 33.37 | ||||
| Completion point date | Aug 2006 | ||||
| Disbursement of IMF assistance (SDR Million) | |||||
| Assistance disbursed to the member | 33.37 | ||||
| Interim assistance | 11.57 | ||||
| Completion point balance | 21.80 | ||||
| Additional disbursement of interest income2 | 3.82 | ||||
| Total disbursements | 37.19 | ||||
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.
Implementation of HIPC Initiative:
| Commitment of HIPC assistance | Enhanced Framework | ||||
| Decision point date | Dec 2000 | ||||
| Assistance committed | |||||
| by all creditors (US$ Million)1 | 1,057.00 | ||||
| Of which: IMF assistance (US$ million) | 45.27 | ||||
| (SDR equivalent in millions) | 33.37 | ||||
| Completion point date | Aug 2006 | ||||
| Disbursement of IMF assistance (SDR Million) | |||||
| Assistance disbursed to the member | 33.37 | ||||
| Interim assistance | 11.57 | ||||
| Completion point balance | 21.80 | ||||
| Additional disbursement of interest income2 | 3.82 | ||||
| Total disbursements | 37.19 | ||||
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.
Implementation of Multilateral Debt Relief Initiative (MDRI):
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.
| MDRI-eligible debt (SDR Million)1 | 37.87 | ||||
| Financed by: MDRI Trust | 14.53 | ||||
| Remaining HIPC resources | 23.34 | ||||
| Debt Relief by Facility (SDR Million) | Eligible Debt | ||||
| Delivery Date | GRA | PRGF | Total | ||
| December 2006 | N/A | 7.91 | 7.91 | ||
| September 2006 | 10.84 | 19.12 | 29.96 | ||
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.
| MDRI-eligible debt (SDR Million)1 | 37.87 | ||||
| Financed by: MDRI Trust | 14.53 | ||||
| Remaining HIPC resources | 23.34 | ||||
| Debt Relief by Facility (SDR Million) | Eligible Debt | ||||
| Delivery Date | GRA | PRGF | Total | ||
| December 2006 | N/A | 7.91 | 7.91 | ||
| September 2006 | 10.84 | 19.12 | 29.96 | ||
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.
Implementation of Catastrophe Containment and Relief (CCR): Not Applicable.
As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.
Safeguards Assessments:
The 2012 safeguards assessment confirmed that legal reforms were required to address the RBM’s lack of operational autonomy. The assessment also reiterated the need to enhance oversight of foreign reserves management, expand disclosures contained in the financial statements and strengthen data compilation procedures. Since then, the RBM has taken steps to ensure that its external audit and financial statements are accordance with international standards. The RBM continues to publish its financial statements while the internal audit function benefitted from implementing the recommendations of an external quality review. Legal amendments were also enacted in 2015 to limit direct advances to the government and strengthen audit and accountability requirements.
The safeguards monitoring visit to the RBM in February 2016 found that all recommendations of the 2012 assessment were implemented, with the exception of the remaining weaknesses in the RBM Act that continue to impede on the bank’s autonomy. Steps are underway to address control weaknesses identified in the banking operations. The 2016 monitoring assessment recommended that the RBM’s internal audit function assess the operating effectiveness of the enhanced controls through special audits. Also, revision of the investment policy is needed to limit concentration of investments in institutions with a credit rating below investment grade.
Exchange Arrangements:
The de facto exchange rate classification of a floating arrangement is under review. 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 has allowed substantial volatility in the exchange rate. Official actions continue to play a role in influencing the exchange rate, but the exchange rate movements are largely market determined and staff found that the authorities’ practice of determining the exchange rate of commercial banks through moral suasion has ceased, thereby removing the official action that gave rise to the multiple currency practice identified in August 2006 and manifested by the significant spread between the commercial bank and foreign exchange bureau rates. Malawi maintains a system free from restrictions on the making of payments and transfers for current international transactions.
Article IV Consultation:
It is expected that the next Article IV consultation with Malawi will take place on the standard 12-month cycle. The Executive Board concluded the last Article IV consultation with Malawi on December 11, 2015.
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 (SM/08/198).
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 was published in February, 2005.
Technical Assistance:
| Date of Delivery | Department | Ministry/Agency | Purpose/Topic | Modality |
|---|---|---|---|---|
| 04/17 | STA | RBM | Training on Government Financial Statistics (GFS) | Mission |
| 04/17 | STA | RBM | Training on Financial Soundness Indicator (FSI) | Mission |
| 04/17 | FAD | MOF | Strengthening cash management | Mission |
| 04/17 | FAD | MRA | Developing compliance risk management capabilities | Mission |
| 04/17 | ICD | RBM | Developing a Forecasting and Policy Analysis System (FPAS) | Mission |
| 05/17 | FAD | MRA | Training in post clearance auditing (PCA) in customs administration | Mission |
| 11/16 | FAD | MRA | Improving integrity of tax-payer register | Mission |
| 10/16 | ICD | RBM | Developing a Forecasting and Policy Analysis System (FPAS) | Mission |
| 10/16 | FAD | MRA | Operationalizing risk management in Customs | Workshop |
| 10/16 | STA | NSO | National accounts statistics | Mission |
| 09/16 | FAD | MOF | Building and sustaining financial control | Mission |
| 09/16 | STA | RBM | Enhancement of General Data Dissemination System (GDDS) | Mission |
| 09/16 | MCM | RBM | Operationalizing and further streamlining the Information Technology (IT) risk examination framework | Mission |
| 08/16 | STA | NSO | Consumer Price Index (CPI) | Mission |
| 07/16 | STA | NSO | Government Finance Statistics (GFS) | Mission |
| 05/16 | FAD | MOF | Bank reconciliations, arrears reporting, and IFMIS | Mission |
| 04/16 | STA | NSO | National accounts statistics (follow-up) | Mission |
| 04/16 | MCM | RBM | Developing capacity on the Supervisory review in the context of Pillar 2 of the Basel framework | Mission |
| 03/16 | MCM | RBM | Developing capacity on operational and technology risk | Mission |
| 02/16 | MCM | RBM | Safeguards assessment | Mission |
| 02/16 | MCM | RBM | Internal guideline for foreign exchange intervention | Mission |
| 01/16 | FAD | MOF | General tax policy diagnostic including extractive industries | Mission |
| 01/16 | FAD | MOF | Introducing New PFM Advisor | Mission |
| 01/16 | LEG | MOF | Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) | Mission |
| 11/15 | FAD | MOF | Improving the coverage and quality of fiscal reporting | Mission |
| 11/15 | MCM | RBM | Money and Repo Market Development | Mission |
| 10/15 | STA | NSO | National accounts statistics | Mission |
| 09/15 | FAD | MOF | Financial Controls and Disciplines: Enforcing Accountability | Mission |
| 09/15 | FAD | MOF | Pension reform proposals | Mission |
| 07/15 | FAD | MOF | Improving cash planning and management | Mission |
| 06/15 | STA | NSO | Price Statistics | Mission |
| 05/15 | FAD | RBM | TADAT Pilot Assessment | Mission |
| 04/15 | FAD | MOF | Implementing priority PFM reforms II | Mission |
| 04/15 | STA | NSO | National Accounts Statistics | Mission |
| 03/15 | LEG | RBM | Helping draft Banking Law amendments | Mission |
| 03/15 | STA | MOF | Government Finance Statistics | Mission |
| 02/15 | STA | NSO | Balance of Payments Statistics | Mission |
| 02/15 | STA | NSO | National Accounts Statistics Harmonization | Workshop |
| 02/15 | MCM | RBM | Advice on the Implementation of ICAAP/SREP supervisory framework. | Mission |
| 01/15 | FAD | MOF | Action plan for implementing priority PFM reforms | Mission |
| 11/14 | STA | NSO | Assistance with redeveloping data | Mission |
| 11/14 | FAD | Ministry of Finance | PFM Action Plan follow-up | Mission |
| 09/14 | STA | NSO | Development of direct prices survey for MPIs | Mission |
| 03/14 | STA | NSO | Further Assistance on Data Improvement | Mission |
| 03/14 | FAD | Ministry of Finance | PFM Reform Program | Mission |
| Date of Delivery | Department | Ministry/Agency | Purpose/Topic | Modality |
|---|---|---|---|---|
| 04/17 | STA | RBM | Training on Government Financial Statistics (GFS) | Mission |
| 04/17 | STA | RBM | Training on Financial Soundness Indicator (FSI) | Mission |
| 04/17 | FAD | MOF | Strengthening cash management | Mission |
| 04/17 | FAD | MRA | Developing compliance risk management capabilities | Mission |
| 04/17 | ICD | RBM | Developing a Forecasting and Policy Analysis System (FPAS) | Mission |
| 05/17 | FAD | MRA | Training in post clearance auditing (PCA) in customs administration | Mission |
| 11/16 | FAD | MRA | Improving integrity of tax-payer register | Mission |
| 10/16 | ICD | RBM | Developing a Forecasting and Policy Analysis System (FPAS) | Mission |
| 10/16 | FAD | MRA | Operationalizing risk management in Customs | Workshop |
| 10/16 | STA | NSO | National accounts statistics | Mission |
| 09/16 | FAD | MOF | Building and sustaining financial control | Mission |
| 09/16 | STA | RBM | Enhancement of General Data Dissemination System (GDDS) | Mission |
| 09/16 | MCM | RBM | Operationalizing and further streamlining the Information Technology (IT) risk examination framework | Mission |
| 08/16 | STA | NSO | Consumer Price Index (CPI) | Mission |
| 07/16 | STA | NSO | Government Finance Statistics (GFS) | Mission |
| 05/16 | FAD | MOF | Bank reconciliations, arrears reporting, and IFMIS | Mission |
| 04/16 | STA | NSO | National accounts statistics (follow-up) | Mission |
| 04/16 | MCM | RBM | Developing capacity on the Supervisory review in the context of Pillar 2 of the Basel framework | Mission |
| 03/16 | MCM | RBM | Developing capacity on operational and technology risk | Mission |
| 02/16 | MCM | RBM | Safeguards assessment | Mission |
| 02/16 | MCM | RBM | Internal guideline for foreign exchange intervention | Mission |
| 01/16 | FAD | MOF | General tax policy diagnostic including extractive industries | Mission |
| 01/16 | FAD | MOF | Introducing New PFM Advisor | Mission |
| 01/16 | LEG | MOF | Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) | Mission |
| 11/15 | FAD | MOF | Improving the coverage and quality of fiscal reporting | Mission |
| 11/15 | MCM | RBM | Money and Repo Market Development | Mission |
| 10/15 | STA | NSO | National accounts statistics | Mission |
| 09/15 | FAD | MOF | Financial Controls and Disciplines: Enforcing Accountability | Mission |
| 09/15 | FAD | MOF | Pension reform proposals | Mission |
| 07/15 | FAD | MOF | Improving cash planning and management | Mission |
| 06/15 | STA | NSO | Price Statistics | Mission |
| 05/15 | FAD | RBM | TADAT Pilot Assessment | Mission |
| 04/15 | FAD | MOF | Implementing priority PFM reforms II | Mission |
| 04/15 | STA | NSO | National Accounts Statistics | Mission |
| 03/15 | LEG | RBM | Helping draft Banking Law amendments | Mission |
| 03/15 | STA | MOF | Government Finance Statistics | Mission |
| 02/15 | STA | NSO | Balance of Payments Statistics | Mission |
| 02/15 | STA | NSO | National Accounts Statistics Harmonization | Workshop |
| 02/15 | MCM | RBM | Advice on the Implementation of ICAAP/SREP supervisory framework. | Mission |
| 01/15 | FAD | MOF | Action plan for implementing priority PFM reforms | Mission |
| 11/14 | STA | NSO | Assistance with redeveloping data | Mission |
| 11/14 | FAD | Ministry of Finance | PFM Action Plan follow-up | Mission |
| 09/14 | STA | NSO | Development of direct prices survey for MPIs | Mission |
| 03/14 | STA | NSO | Further Assistance on Data Improvement | Mission |
| 03/14 | FAD | Ministry of Finance | PFM Reform Program | Mission |
Joint Managerial Action Plan
(May 9, 2017)
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| World Bank work program in the next 12 months | Analytical and Advisory Activities: | ||
| 1. Systematic Country Diagnostic | June 2017 | November 2017 | |
| 2. Country Economic Memorandum | June 2017 | ||
| 3. Malawi Economic Monitor (two editions) | September 2017 | June 2017 | |
| 4. Country Environmental Analysis | June 2017 | April 2018 | |
| 5. Shock Responsive Safety Nets | September 2017 | February 2018 | |
| 6. Public Expenditure Review (social sectors) | October 2017 | September 2018 | |
| 7. Secondary Education Quality Assessment | August 2017 | June 2018 | |
| 8. Institutional and Non-Technical Drivers of Service Delivery in the Agricultural Sector | September 2017 | March 2018 | |
| 9. Renewable Energy Resource Mapping | October 2017 | November 2018 | |
| 10. FSAP Development Module | August 2017 | August 2017 | |
| 11. Warehouse Receipt Financing | September 2017 | August 2017 | |
| Lending: | |||
| 1. Agricultural Support and Fiscal Management DPO | May 2017 | ||
| 2. Digital Malawi Phase I | June 2017 | ||
| 3. Agricultural Commercialization | May 2017 | ||
| 4. Shire Valley Transformation Phase I | July 2017 | September 2017 | |
| 5. Lilongwe Water and Sanitation | August 2017 | November 2017 | |
| 6. Public Sector | September 2017 | June 2017 | |
| 7. Nutrition | September 2017 | June 2017 | |
| 8. Social Protection | November 2017 | September 2018 | |
| B. Requests for Work Program Inputs | |||
| IMF request to World Bank | 1. Updates on WB support to Malawi | Continuous | |
| World Bank request to IMF | 1. Regular updates and exchange of views on medium-term macroeconomic and fiscal projections including sharing detailed excel tables on Real, Monetary, Fiscal and External Sectors | Continuous | |
| C. Agreement on Joint Products and Missions | |||
| Joint products in next 12 months | 1. Debt Sustainability Analysis (update) | June, 2017 | |
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| A. Mutual Information on Relevant Work Programs | |||
| World Bank work program in the next 12 months | Analytical and Advisory Activities: | ||
| 1. Systematic Country Diagnostic | June 2017 | November 2017 | |
| 2. Country Economic Memorandum | June 2017 | ||
| 3. Malawi Economic Monitor (two editions) | September 2017 | June 2017 | |
| 4. Country Environmental Analysis | June 2017 | April 2018 | |
| 5. Shock Responsive Safety Nets | September 2017 | February 2018 | |
| 6. Public Expenditure Review (social sectors) | October 2017 | September 2018 | |
| 7. Secondary Education Quality Assessment | August 2017 | June 2018 | |
| 8. Institutional and Non-Technical Drivers of Service Delivery in the Agricultural Sector | September 2017 | March 2018 | |
| 9. Renewable Energy Resource Mapping | October 2017 | November 2018 | |
| 10. FSAP Development Module | August 2017 | August 2017 | |
| 11. Warehouse Receipt Financing | September 2017 | August 2017 | |
| Lending: | |||
| 1. Agricultural Support and Fiscal Management DPO | May 2017 | ||
| 2. Digital Malawi Phase I | June 2017 | ||
| 3. Agricultural Commercialization | May 2017 | ||
| 4. Shire Valley Transformation Phase I | July 2017 | September 2017 | |
| 5. Lilongwe Water and Sanitation | August 2017 | November 2017 | |
| 6. Public Sector | September 2017 | June 2017 | |
| 7. Nutrition | September 2017 | June 2017 | |
| 8. Social Protection | November 2017 | September 2018 | |
| B. Requests for Work Program Inputs | |||
| IMF request to World Bank | 1. Updates on WB support to Malawi | Continuous | |
| World Bank request to IMF | 1. Regular updates and exchange of views on medium-term macroeconomic and fiscal projections including sharing detailed excel tables on Real, Monetary, Fiscal and External Sectors | Continuous | |
| C. Agreement on Joint Products and Missions | |||
| Joint products in next 12 months | 1. Debt Sustainability Analysis (update) | June, 2017 | |
Relations with the African Development Bank Group
(As of May, 2017)
African Development Bank (AfDB) operations in Malawi date back to 1969. The AfDB Malawi Field Office was opened in 2007. As at 31st March, 2017, the Bank had provided significant and diversified support to Malawi, with cumulative commitments worth UA 889.6 million (about US$1.2 billion) to finance 105 operations including 13 studies and 2 lines of credit.
The current Country Strategy Paper (CSP) of the Bank covering 2013–17 is fully aligned to the second Malawi Growth and Development Strategy (MGDS II) covering the period 2011–16 and the Bank’s corporate priorities in the Long-Term Strategy (LTS, 2013–22). The CSP, currently 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 date, the Bank has approved projects in the water, social sector, agriculture and roads sectors and in Public Financial Management in line with the CSP priorities. In 2016, three new operations were approved by the Board: (i) Agriculture Infrastructure and Youth Agri Business Project (US$22 million); (ii) Food Crisis Response Budgetary Support Program (US$16 million); and the Jobs for Youth Project (US$12 million). The aim of these interventions is to improve agriculture infrastructure for enhanced productivity and create employment and income earning opportunities for the youth through skills development in agri-business and other key economic activities. The objective of the Food Crisis Response budgetary support is to mitigate the impact of the drought induced food crisis and ease the fiscal pressures.
The Bank plans to scale up its lending to the energy sector with a view to address the power shortages, a major constraint to Malawi’s growth. The pipeline of energy sector projects, include the Malawi-Mozambique Power Inter-connector Project to be co-financed with the World Bank, the Kholombidzo Hydro Power Project and the Songwe River Basin Development Project. The Bank will also promote private investment in the energy sector, through Public Private Partnerships (PPPs) and the use of innovative financing instruments, such as Partial Risk Guarantees. In November 2016, the Bank conducted the Energy Financing Seminar in Lilongwe Malawi to disseminate information to potential investors regarding existing financing opportunities. The Bank is taking the lead in mobilizing donor resources and private finance for the Songwe Hydro Power Project, a multinational project with Tanzania.
The Bank has continued to support PFM Reforms and capacity building in coordination with other Development Partners. The PFM Institutional Support (ISP) I is nearing completion while the second phase is making steady progress and expected to be completed in 2017. Among the achievements of ISPI is the launching of the ASYCUDA World which has improved collection of revenue from custom duties. The Bank has also provided Malawi with quick disbursing budget support. Following Government’s 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 an ADF Grant for the Crisis Response Budget Support operation for Malawi in July 2012, in the amount of US$40 million. The Bank designed the Restoration of Fiscal Stability and Social Protection (RFSSP) program whose objective was 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. To support this agenda, the RFSSP had two components: (i) strengthened PFM transparency and accountability, and (ii) strengthened social protection system.
In April 2015, the African Development Fund Board approved a grant of US$30 million for the Protection of Basic Services Program. This is ring fenced Sector Budget Support, which is designed to protect critical expenditures in health, education and social protection, and improve accountability following suspension of general budget support. The grant was disbursed in one tranche in July 2015. The PBS operation was followed by the Food Crisis Response Budgetary Support in 2016. The Bank intends to provide general budget support during the medium term, which will complement the World Bank’s recently approved budget support to Malawi. The Bank will continue to coordinate closely with the IMF in the design of its budget support operations to ensure its programs are underpinned by sound macro-economic policies.
Three new operations are programmed for approval in 2017: (i) the Shire Valley Irrigation Project (US$40 million) which will be co-financed with the World Bank; (ii) Investment Promotion & Competitiveness Program (US$9.5 million); and (iii) Economic Census Capacity Building Project (US$1 million).
AfDB Ongoing Operations
The Bank’s current active portfolio includes four projects in the agriculture sector: (i) Agriculture Infrastructure Support Project; (ii) Small Holder Irrigation and Value Addition Project; (iii) Agriculture Infrastructure & Youth Agri Business; and (iv) Agricultural Cooperative Bank Study. There are currently three projects providing support to the social sector and for economic empowerment: (i) the Competitiveness and Job Creation Project, which seeks to improve the capabilities and the competitiveness of the private sector as well as increase export diversification and job creation; (ii) Support to Higher Education Science & Technology Project which aims to increase access to technical, entrepreneurship, vocational and training (TEVET) and higher education in Malawi, with particular emphasis on Information and Communication Technology (ICT) and (iii) Jobs for Malawi Youth targeting the youth. In the transport sector the Bank is supporting the Mzuzu-Nkhata Bay Road Rehabilitation Project and the Multinational Nacala Road Corridor Phase IV. In the water sector, the Bank is providing support for two projects: the Sustainable Rural Water and Sanitation for Improved Health and Livelihood Project and the Mzimba Integrated Urban Water Project of US$5 million, co-financed with OFID. The two on-going Institutional Support Projects are providing support for the Public Financial Management Reform Program. Currently, the overall Bank portfolio is rated satisfactory. The Bank’s Malawi Field Office is working closely with the Government to ensure continued improvement in project implementation efficiency for enhanced development results.
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. In 2013, the Bank collaborated with the World Bank and other partners on the Public Expenditure Review. The Bank has in addition provided support for the Expenditure Tracking Study. 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 has provided technical assistance to the Malawi Postal Cooperation for the development of the E-Post Strategy and Action Plan. 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.
The Bank shall commence preparation of a new Country Strategy Paper soon, which will be aligned with Malawi’s new National Development Plan and the Bank’s Long Term Strategy, in particular, the “High Fives” priorities, which include “Light up and Power Africa”, “Feed Africa”, and “Improve the Quality of Life for the People of Africa”.
Statistical Issues
Malawi—Statistical Issues Appendix
As of May 20, 2016
Malawi—Statistical Issues Appendix
As of May 20, 2016
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision has some shortcomings, but is broadly adequate for surveillance. Shortcomings remain in the national accounts—mainly due to operational challenges—and government finance statistics. | |
| National Accounts: Since 2010, STA is providing technical assistance (TA) to the National Statistics Office (NSO) on strengthening the quality of national accounts statistics, most recently in April this year. The NSO has revised the national accounts methodology to improve the consistency with the 2008 SNA and develop preliminary quarterly estimates of GDP by economic activity. Further TAs being provided to develop quarterly GDP estimates by expenditure components. Main operational challenges are the NSO’s continuing budget constraints, the lack of funds to implement the requisite data collections, and low staffing levels in the national accounts unit. | |
| Price Statistics: An updated and revised consumer price index (CPI) was introduced in January 2013. In addition to new weights and items, the updated CPI reflects improved index calculation methods, the implementation of the internationally recommended Classification of Individual Consumption by Purpose (COICOP), and improved compilation methods. In April 2013, an updated PPI for manufacturing was released, reflecting updated weights. There remains a need to expand the coverage of the PPI to include additional economic activities. The NSO is in process of developing export-import price indexes. | |
| Government Finance Statistics: The accuracy and reliability of the data are affected by source data weaknesses, especially coming from inaccuracies in recording and consolidating the data. Due primarily to differences in coverage and the recording of some subsidies on a funding basis, published data for the budgetary central government include a sizeable statistical discrepancy between above and below the line data reported by the Reserve Bank of Malawi (RBM). 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. This is a result of the way taxes are reported and timing differences between receipt of taxes and cleared funds becoming available for the government. Nontax revenue, including capital revenues collected by line ministries, is not properly accounted for in the fiscal reports prepared by the Ministry of Finance. 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 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 the chart of accounts and output-based structures so that they could more easily be realigned to the national strategy and be more readily understood. The most recent STA mission in March 2015 proposed and discussed a migration plan and timetable to adopt the GFSM 2001 methodology. | |
| Monetary and Financial Statistics: The RBM recently revamped the other depository corporations (ODCs)’ report templates to ensure their consistency with the methodology outlined in the MFS Manual. Despite these improvements, progress toward full adoption of the SRF-based monetary statistics is hindered by the quality of the underlying source data for ODCs, where ODCs’ balance sheets and their supporting data schedules do not always match. | |
| Financial Sector Surveillance: Malawi does not report Financial Soundness Indicators (FSIs) to STA. | |
| External sector statistics: The external sector statistics are in broad conformity with the fifth edition of the Balance of Payments Manual (BPM5). The NSO has gradually been implementing BPM6. However, insufficient resources for collecting survey data and the understaffed balance of payments section continue to hamper further improvements. In the absence of regular source data, some of the components of BOP and IIP data are imputed based on the data from earlier surveys. Procedures for assessing the accuracy of trade data need to be improved. Project aid is currently classified as current transfers rather than in the capital account, and several large in-kind projects are not captured in the balance of payments data properly. Data on foreign direct investment and portfolio flows remains weak. Capacity building programs, including Fund-provided training and technical assistance, seek to overcome the above constraints. In addition, updated BOP and IIP metadata should be made available on the NSO website. | |
| II. Data Standards and Quality | |
| In FY2016, STA will be conducting an Enhanced General Data Dissemination System (e-GDDS) mission to implement the e-GDDS framework, including a National Summary Data Page in Malawi. | Data ROSC was published on February 17, 2005. |
| III. Reporting to STA | |
| Government finance data for the Budgetary Central Government in a GFSM 2001 presentation are reported for publication in the Government Finance Statistics Yearbook (GFSY) and International Financial Statistics (IFS). However, these data are not disseminated domestically. The RBM reports monetary data on a regular basis, with monthly data disseminated through the International Financial Statistics (IFS). The NSO reports the BOP and IIP data to STA annually in the BPM6 format. | |
Malawi—Statistical Issues Appendix
As of May 20, 2016
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision has some shortcomings, but is broadly adequate for surveillance. Shortcomings remain in the national accounts—mainly due to operational challenges—and government finance statistics. | |
| National Accounts: Since 2010, STA is providing technical assistance (TA) to the National Statistics Office (NSO) on strengthening the quality of national accounts statistics, most recently in April this year. The NSO has revised the national accounts methodology to improve the consistency with the 2008 SNA and develop preliminary quarterly estimates of GDP by economic activity. Further TAs being provided to develop quarterly GDP estimates by expenditure components. Main operational challenges are the NSO’s continuing budget constraints, the lack of funds to implement the requisite data collections, and low staffing levels in the national accounts unit. | |
| Price Statistics: An updated and revised consumer price index (CPI) was introduced in January 2013. In addition to new weights and items, the updated CPI reflects improved index calculation methods, the implementation of the internationally recommended Classification of Individual Consumption by Purpose (COICOP), and improved compilation methods. In April 2013, an updated PPI for manufacturing was released, reflecting updated weights. There remains a need to expand the coverage of the PPI to include additional economic activities. The NSO is in process of developing export-import price indexes. | |
| Government Finance Statistics: The accuracy and reliability of the data are affected by source data weaknesses, especially coming from inaccuracies in recording and consolidating the data. Due primarily to differences in coverage and the recording of some subsidies on a funding basis, published data for the budgetary central government include a sizeable statistical discrepancy between above and below the line data reported by the Reserve Bank of Malawi (RBM). 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. This is a result of the way taxes are reported and timing differences between receipt of taxes and cleared funds becoming available for the government. Nontax revenue, including capital revenues collected by line ministries, is not properly accounted for in the fiscal reports prepared by the Ministry of Finance. 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 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 the chart of accounts and output-based structures so that they could more easily be realigned to the national strategy and be more readily understood. The most recent STA mission in March 2015 proposed and discussed a migration plan and timetable to adopt the GFSM 2001 methodology. | |
| Monetary and Financial Statistics: The RBM recently revamped the other depository corporations (ODCs)’ report templates to ensure their consistency with the methodology outlined in the MFS Manual. Despite these improvements, progress toward full adoption of the SRF-based monetary statistics is hindered by the quality of the underlying source data for ODCs, where ODCs’ balance sheets and their supporting data schedules do not always match. | |
| Financial Sector Surveillance: Malawi does not report Financial Soundness Indicators (FSIs) to STA. | |
| External sector statistics: The external sector statistics are in broad conformity with the fifth edition of the Balance of Payments Manual (BPM5). The NSO has gradually been implementing BPM6. However, insufficient resources for collecting survey data and the understaffed balance of payments section continue to hamper further improvements. In the absence of regular source data, some of the components of BOP and IIP data are imputed based on the data from earlier surveys. Procedures for assessing the accuracy of trade data need to be improved. Project aid is currently classified as current transfers rather than in the capital account, and several large in-kind projects are not captured in the balance of payments data properly. Data on foreign direct investment and portfolio flows remains weak. Capacity building programs, including Fund-provided training and technical assistance, seek to overcome the above constraints. In addition, updated BOP and IIP metadata should be made available on the NSO website. | |
| II. Data Standards and Quality | |
| In FY2016, STA will be conducting an Enhanced General Data Dissemination System (e-GDDS) mission to implement the e-GDDS framework, including a National Summary Data Page in Malawi. | Data ROSC was published on February 17, 2005. |
| III. Reporting to STA | |
| Government finance data for the Budgetary Central Government in a GFSM 2001 presentation are reported for publication in the Government Finance Statistics Yearbook (GFSY) and International Financial Statistics (IFS). However, these data are not disseminated domestically. The RBM reports monetary data on a regular basis, with monthly data disseminated through the International Financial Statistics (IFS). The NSO reports the BOP and IIP data to STA annually in the BPM6 format. | |
Malawi: Tables of Common Indicators Required for Surveillance
(As of May 24, 2017)
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 discounts rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, 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).
Malawi: Tables of Common Indicators Required for Surveillance
(As of May 24, 2017)
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | Current | Current | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 02/2017 | 04/2017 | M | M | M |
| Reserve/Base Money | 02/2017 | 04/2017 | M | M | M |
| Broad Money | 02/2017 | 04/2017 | M | M | M |
| Central Bank Balance Sheet | 02/2017 | 04/2017 | M | M | M |
| Consolidated Balance Sheet of the Banking System | 02/2017 | 04/2017 | M | M | M |
| Interest Rates2 | 03/2017 | 03/2017 | M | M | M |
| Consumer Price Index | 04/2017 | 05/2017 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—General Government4 | NA. | NA | |||
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government | 12/2017 | 03/2017 | M | M | I |
| Stocks of Central Government and Central Government-Guaranteed Domestic Debt5 | 12/2017 | 03/2017 | M | M | M |
| External Current Account Balance | 12/2016 | 03/2017 | A | A | A |
| Exports and Imports of Goods and Services | 12/2016 | 03/2017 | A | A | A |
| GDP/GNP | 12/2012 | 03/2015 | A | A | A |
| Gross External Debt | 12/2016 | 03/2017 | A | I | I |
| International Investment Position6 | 2014 | 03/2016 | I | I | I |
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 discounts rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, 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).
Malawi: Tables of Common Indicators Required for Surveillance
(As of May 24, 2017)
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | Current | Current | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | 02/2017 | 04/2017 | M | M | M |
| Reserve/Base Money | 02/2017 | 04/2017 | M | M | M |
| Broad Money | 02/2017 | 04/2017 | M | M | M |
| Central Bank Balance Sheet | 02/2017 | 04/2017 | M | M | M |
| Consolidated Balance Sheet of the Banking System | 02/2017 | 04/2017 | M | M | M |
| Interest Rates2 | 03/2017 | 03/2017 | M | M | M |
| Consumer Price Index | 04/2017 | 05/2017 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—General Government4 | NA. | NA | |||
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government | 12/2017 | 03/2017 | M | M | I |
| Stocks of Central Government and Central Government-Guaranteed Domestic Debt5 | 12/2017 | 03/2017 | M | M | M |
| External Current Account Balance | 12/2016 | 03/2017 | A | A | A |
| Exports and Imports of Goods and Services | 12/2016 | 03/2017 | A | A | A |
| GDP/GNP | 12/2012 | 03/2015 | A | A | A |
| Gross External Debt | 12/2016 | 03/2017 | A | I | I |
| International Investment Position6 | 2014 | 03/2016 | I | I | I |
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 discounts rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, 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).