IMF to hold talks with Malawi on debt relief

BLANTYRE – The International Monetary Fund (IMF) is to hold talks with Malawi next month to assess whether the southern African country has met conditions for debt relief, a senior official said late on Thursday.

Patrick Kabambe, acting Secretary to the Treasury, said an IMF mission would evaluate the government’s economic performance since the Fund approved a three-year, US$55,9 million loan package in August for reform programmes. “They want to assess if we have achieved agreed targets, especially those under the HIPC initiative,” he said.The fund halted lending to Malawi after the government’s spending surpassed targets in 2003-04, but continued to provide economic policy advice under a staff monitoring programme.The August deal, which gives Malawi access to cheap loans in return for adhering to economic policy tenets, constituted a stamp of approval that could draw other donors to the impoverished country as it combats a severe food shortage.Kabambe said next month’s assessment was crucial as the fund’s representatives would recommend to their Executive Board in Washington whether or not to grant Malawi debt relief under the Multilateral Debt Relief Initiative (MDRI).The global lender last month approved a US$4,8 billion package to cancel the debts of 20 of the world’s poorest countries under a plan launched in June by the Group of Eight major industrialised nations.Malawi was not part of this “first wave”.Malawi’s total debt is close to US$3 billion, a crippling burden for an AIDS-ravaged nation of around 11 million people which has a gross national income of less than US$2 billion, according to World Bank data.President Bingu wa Mutharika has pursued fiscal reforms and has launched an anti-graft campaign that has targeted senior members of his former party.- Nampa-Reuters”They want to assess if we have achieved agreed targets, especially those under the HIPC initiative,” he said.The fund halted lending to Malawi after the government’s spending surpassed targets in 2003-04, but continued to provide economic policy advice under a staff monitoring programme.The August deal, which gives Malawi access to cheap loans in return for adhering to economic policy tenets, constituted a stamp of approval that could draw other donors to the impoverished country as it combats a severe food shortage.Kabambe said next month’s assessment was crucial as the fund’s representatives would recommend to their Executive Board in Washington whether or not to grant Malawi debt relief under the Multilateral Debt Relief Initiative (MDRI).The global lender last month approved a US$4,8 billion package to cancel the debts of 20 of the world’s poorest countries under a plan launched in June by the Group of Eight major industrialised nations.Malawi was not part of this “first wave”.Malawi’s total debt is close to US$3 billion, a crippling burden for an AIDS-ravaged nation of around 11 million people which has a gross national income of less than US$2 billion, according to World Bank data.President Bingu wa Mutharika has pursued fiscal reforms and has launched an anti-graft campaign that has targeted senior members of his former party.- Nampa-Reuters