‘IMF’s decision to suspend ECF programme is a wake-up call for government to stop piling huge debts and to enhance fight against corruption’

Rev. Baxton Maulidi

* It is a blessing in disguise because as a country, we can’t keep on piling huge debts only to be plundered through government over-expenditure

* We need bold leadership and new way of thinking to end corruption and overspending must stop—Rev. Maulidi

By Duncan Mlanjira

All Africa Conference of Churches (AACC) Economic Justice, Transparency & Accountability champion in Malawi, Rev. Baxton Maulidi contends that the decision by the International Monetary Fund (IMF) to suspend Malawi’s US$175 million (about MK306 billion) extended credit facility (ECF), is a wake-up call for government to stop piling huge debts as well as to enhance fight against corruption.

According to some inside sources at IMF, the ECF programme has been terminated due to failure by President Lazarus Chakwera’s administration to adhere to what was agreed upon with the IMF team, which included implementation of austerity measures and earnest fight against corruption.

Rev. Maulidi said: “Of course, this decision means that Malawians must brace for tougher times because the country will be faced with shortage of forex which might exacerbate the already high prices of basic household commodities.

“But it is a blessing in disguise because as a country, we can’t keep on piling huge debts only to be plundered through government over-expenditure and corruption. We need bold leadership and new way of thinking to end corruption and that overspending must stop.”

Rev. Maulidi — who has constantly reminded the government against overspending and to enhance the fight against corruption — further observed that it is very unfortunate that the authorities are failing to adhere to the strict austerity measures which President Lazarus Chakwera announced towards the end of last year.

“What we have seen is that these measures have been ignored, which leads to corruption to be on the rise. If the austerity measures are not being implemented, the same is bound to happen in enforcement of the anti-corruption drive — as probably observed by the IMF itself.”

The Economic Justice, Transparency & Accountability champion in Malawi takes note that the over-expenditure is due to lavish travels and corruption which is rampant, saying: “We cannot be asking for debts such as the ECF programme from the IMF to service government expenditure because it was aimed to restore macroeconomic stability and boost investor confidence in the country.”

He added that the government should not opt to replace the ECF programme in the interim by borrowing from non-concessional lending institutions, stressing that “the IMF offers concessional loans and the non-concessional banks, such as those in China and other countries, can be willing to accept providing Malawi with loans, which are of higher interest rates.

“We don’t want to hear that the State authorities have sneaked out to borrow from these non-concessional banks to get money that would end up in their pockets through corruption means. They should manage the economy with the resources we have.

“We shouldn’t pile more problems on the next government administration to inherit huge debt, that is why I am saying that — while the decision by the IMF is bound to further destabilise the country’s economy — it  is a blessing in disguise for the current administration to be bold by implementing the austerity measures the President ordered and to enhance the fight against corruption,” said Rev. Maulidi.

In its statement yesterday, the Ministry of Finance & Economic Affairs said  the government remains confident that after the September 16 General Elections, “the IMF will continue the progress made thus far in restoring international donor confidence in Malawi’s commitment to the macroeconomic reforms necessary for staying on the path of recovery and debt sustainability”.

It further said macroeconomic reforms were being pursued “despite the unsustainable debt stock inherited in 2020, coupled with exogenous shocks such as CoVID-19; Cyclone Ana in 2021; price inflations precipitated by the war in Eastern Europe in 2022; cholera outbreak and Cyclone Freddy in 2023; and El Niño drought conditions in 2024”.

And in recognising the extent of the exogenous shocks that affected the country, the Ministry says the IMF has agreed to send a delegation to Malawi by the end of this month of May “to conduct a monitoring and consultation for Malawi’s economic main stays in preparation for a tailor-made Malawi programme in the future”.

“As such, the Ministry of Finance & Economic affairs assures the public that during the period in which the ECF programme will be in the state of suspension, the economic reforms protocols established to exercise fiscal discipline in compliance with the Public Finance Management Act (2022) will continue in force,” said the statement.