Minister of Finance Fleix Mlusu has disclosed that the Tonse Alliance government has cancelled the International Monetary Fund (IMF) programme, the Extended Credit Facility (ECF), with immediate effect.
Mlusi made the disclosure when he was presenting the 2020/21 national budget in Parliament, Lilongwe on Friday.
“Madam Speaker, following discussions between the Tonse Alliance Government and the IMF, the two parties agreed to cancel the Third Extended Credit Facility on account of changes in policy by the new Administration,” said the Finance Minister.
The policy priorities in the ECF arrangement were aimed to entrench macroeconomic stability, preserve debt sustainability, and advance governance reforms.
Finance Mnister said it is expected that Malawi government will negotiate a new credit facility.
“However, in the interim, Government has negotiated a second Rapid Credit
Facility which is a fast disbursing instrument amounting to US$100.0 million during the 2020/2021 fiscal year,” he said.
The country’s purse keeper however said government will continue to work closely with IMF and other development partners to address economic challenges facing the country.
Mlusu said government has “already reached out” to the donor community for budget support and debt restructuring.
“I therefore wish to thank all cooperating development partners who have responded positively to this call and expect others to also respond favourably,” said Mlusu.
He also thanked the development partners for the “enormous support” rendered to the Government of Malawi in its development agenda.
“Furthermore, our development partners have been instrumental in supporting Government in times of adversity such as; drought, floods and the recent Covid-19 pandemic,” said Mlusu.
He stressed that Malawi has “relied heavily” on donors support as domestic revenues “dwindled” due to the impact of the virus pandemic.
“The Tonse Alliance Government is sincerely humbled and look forward to working with all development partners as we implement the 2020/2021 budget,” he said.
Mlusu ended his budget presentation with a quote of Henry Ford, an American industrialist and business magnate, saying: “If everyone is moving forward together, then success takes care of itself.”
Parliament has since adjourned to Monday afternoon when MPs will be divided into clusters to scrutinize the fiscal plan.