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| Stakeholders hail IMF move |
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by
Ayam Maeresa, 01 October 2003
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18:45:46
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Economic and diplomatic commentators have hailed the International Monetary Fund’s (IMF) willingness to end a biting two-year aid drought but cautioned the country to stay within agreements next time to avoid a repeat of the same.
The commentators said the move was a good sign because lack of aid has caused serious upheavals in the economy, hurting poor people more. They said the country desperately needs the money to tackle deep-rooted poverty.
The IMF, which suspended a Poverty Reduction and Growth Facility (PRGF) programme because of high government spending and failure to conclude high profile corruption cases, said last week its board will review Malawi’s case late this month.
If the board approves, Malawi will get about K983 million (US$9 million) as part of five other future aid tranches of the same amount for the rest of this year and next year but on satisfactory conclusions of quarterly reviews. About US$8 million was disbursed in 2000.
A programme with the IMF is also expected to unlock bilateral aid for balance of payments and budgetary assistance from other development partners, cut following the sour relations with IMF.
“There is hope,” said Royal Norwegian ambassador Asbjorn Eidhammer in an interview on Monday in Mangochi. “Malawi now has an opportunity to take on poverty reduction.”
About six out every 10 people in the country live below the World Bank’s poverty threshold of US$1 per day.
Eidhammer said when aid resumes, the country should in the short term make an effort to cut interest rates high at above 46 percent to give the private a conducive environment to do business.
He said in the long term government should put more resources in education because “it’s the most important factor for the future.” He said faced by a tripartite election in May next year, the country needs aid more than before.
Eidhammer said the public should fight to stem out corruption and related crimes to ensure to ensure that resources are not plundered.
Banker Ammayappa Pillai said in an separate interview in Blantyre Wednesday that move by the IMF was positive, although is was long overdue.
He said aid will assist reduce government’s domestic debt, which economic analysts say is unsustainable at above K45 billion.
Pillai said a reduction in domestic debt will lead to a cut in interest rates and will help strengthen the kwacha, which has depreciated by about K20 to K109.25 against the US dollar in the last three months due to low foreign exchange reserves.
“We want to believe this is the start to resuscitate the economy,” Pillai, who is also managing director of Finance Bank Malawi.
Starved of aid, the economy went into a deep recession and grew negatively by about 1.8 percent last year as industrial output fell sharply by over 13 percent, according to industrial analysts. |
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