IMF commends as positive DPP administration’s measures to control government expenditure

* Applauds measures of reactivating the automatic fuel price mechanism while  encouraging the operationalisation of the promised fiscal discipline and revenue mobilisation, starting with the mid-year budget review

* IMF staff look forward to continued engagement with the authorities on their macroeconomic reform trajectory

By Duncan Mlanjira

The International Monetary Fund (IMF) staff team, led by Justin Tyson that visited Malawi between November 3-7 as part of its regular engagement with the country’s authorities, has commended as positive, the Democratic Progressive Party (DPP) measures to control government expenditure.

In a statement, Tyson’s team also applauds the Malawi Government for reactivating the automatic fuel price mechanism while encouraging the operationalisation of the promised fiscal discipline and revenue mobilisation — starting with the mid-year budget review being discussed in Parliament.

The team further indicated they agreed with the “urgent fiscal consolidation and tighter monetary policy that are needed to tackle inflation, reduce imbalances, and stabilise the foreign exchange market.

The team, which look forward to continued engagement with the government on their macroeconomic reform trajectory, held the engagement with the Minister of Finance, Economic Planning & Development, Joseph Mwanamvekha; Secretary to the Treasury, Dr. Cliff Chiunda; Governor of the Reserve Bank of Malawi, Dr. MacDonald Mwale, and other senior government and RBM officials.

They also engaged with representatives of the private sector, civil society organisations, and Malawi’s development partners — focusing on recent economic developments and near-term policy priorities to support macroeconomic stability and growth.

“The team had productive discussions with the authorities,” Tyson said in the statement. “They discussed recent economic, financial, and social developments.

“The macroeconomic challenges for the new government are significant. These include a worse-than-budgeted fiscal outturn at midyear, accelerated inflation, and continued pressure on the exchange rate.

“Growth is projected to remain modest at 2.4% in 2025, and food insecurity is elevated. Public debt dynamics remain unsustainable.”

Last Sunday, President Arthur Peter Mutharika met an IMF delegation led by Director for Africa, Abebe Selassie at Mtunthama State Lodge in Lilongwe, where he reaffirmed his commitment to tackling Malawi’s pressing national challenges, including fuel scarcity, farm input shortages and food insecurity.

A report by Malawi Government Media, quotes Mutharika as saying it is crucial to begin by resolving short-term challenges such as debt restructuring and limited foreign exchange availability.

“We will get support from the IMF, the private sector and government institutions to address both the short and long-term forex challenges so that we can stabilise the economy as soon as possible.

“At the moment, all the revenue we collect is being used to service debts, but we are working on this. We are also hopeful that the IMF will intervene with the necessary solutions,” Mutharika is quoted as saying.

Present was Finance Minister Mwanamveka, who echoed the President’s sentiments, saying the meeting was fruitful as it allowed the IMF to better understand the President’s vision for addressing the country’s challenges.

“What is pleasing is that the IMF is ready to help,” he said. “They understand the situation on the ground and the challenges we inherited from the previous administration.

“We expect the IMF to support us in terms of foreign exchange, which is a key pillar for the development of this country,” said Mwanamveka, while the IMF Director for Africa, Abebe Selassie, commended Mutharika for his vision and optimism in confronting Malawi’s economic challenges, and pledged the Fund’s support.

“IMF is ready to support Malawi in addressing the macroeconomic crisis through policy advice, capacity development and financing,” he said. “We are in the process of supporting government reforms and will make recommendations wherever necessary.”