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The Minister of Finance, Simplex Chithyola, who had just returned from India where he successfully negotiated a limit on Malawi’s debt with Indian banks, said he acknowledged that the issues raised by the Honourable Eric Meyer were pertinent; however, the Government was already working on addressing them and by September, Malawi would be successful in obtaining the second tranche of IMF funding under the ECF to keep the country on the path of economic recovery.
In an interview with the media yesterday, U.S. Treasury Deputy Assistant Secretary for Africa and the Middle East Meyer said the U.S. government is concerned that Malawi has failed to fulfill its commitment to obtain the second tranche of IMF funds needed to keep the country on the path of economic recovery.
Meyer noted that the Malawian authorities have been unable to reach an agreement with some of Malawi’s international creditors on a necessary debt restructuring, and spending has continued to balloon. These and other problems have been exacerbated by deals that some investors have struck that could undermine Malawi’s agreements with the International Monetary Fund and bilateral creditors, Meyer said.
However, in his response, Chithyola gave details of measures the government is taking to: improve tax collection shortfalls at the Malawi Revenue Authority (MRA), curb bloated public spending, undertake debt restructuring, curb investments that undermine the ECF programme, and curb policies that require intervention by the National Assembly.
- About MRA debt
We understand that the implementation of the plan is hampered by under-collection of revenue by the Malawi Revenue Authority. As a ready measure, the Malawi government has just appointed a Commissioner General to assist in the collection of revenue, but we also need to understand that the country’s business environment also contributes to under-collection.
- On inflation of expenses
The problem of inflation is real, but it is justified because as a government we have social obligations to meet. We need to procure fuel in this country, and if the county runs out of fuel, it will be a very big challenge. We also need to procure medical supplies in this country, and if you look at those expenditures, they are social obligations that we cannot do without.
- Talking about foreign exchange management
We have reduced foreign exchange expenditure while increasing foreign exchange reserves, which is a positive progress we have made.
- About Debt Restructuring
Regarding the debt structure, we just arrived in India today where we met with Indian banks to discuss the debt structure. Next week we will travel to China to discuss the same with Chinese banks. Please remember that we are also in contact with other creditors to reach an agreement on debt restructuring, which is progressing well.
- Regarding investments that conflict with the ECF program
The issues regarding investments pose a challenge to the implementation of this year’s plan. Remember, these investments are not liabilities; these investments may be intended to bring foreign exchange to the country through value addition, but also to increase exports, so we believe that if we complete all of this in the coming weeks, we will be able to successfully pass the first review scheduled for September.
- About legislative policy
I would also like to mention that there are issues and situations that require the intervention of the National Assembly. Parliament will begin sitting from Monday and issues involving legislation will be brought before Parliament to debate and agree on how best to move forward.
- in conclusion
Therefore, we are very optimistic that the government will remain on track and by September, we will have successfully implemented the ECF program.
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