IMF agrees to give Malawi $157 million

AP News
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Posted: Jun 06, 2012 1:45 PM
IMF agrees to give Malawi $157 million

The International Monetary Fund and Malawi have agreed to a $157 million aid package to be distributed over three years to support the country's economy, an IMF official said Wednesday.

The announcement by the IMF's mission chief Tsidi Tsikata during a telephone news conference signals a shift in relations between the agency and the southern African country. Under the late President Bingu wa Mutharika relations between Malawi and the IMF had been tense. Mutharika had refused to devalue the currency as the IMF had advised.

"The government has moved swiftly and boldly to change the policy environment," Tsikata said.

President Joyce Banda, who took over when Mutharika died in office last April, has been keen to differentiate herself from her predecessor. In May, the country devalued its currency by one third. The government has also loosened its restrictions on foreign currency exchange.

The announcement by the IMF came after a two-week visit to Malawi by Tsikata. Speaking to reporters on Wednesday Tsikata described the private sector's attitude as "bullish" but cautioned that there was more work to be done.

"It is not to say we have solved the problem overnight, certainly not," he said.

Tsikata said that there were still concerns about fiscal discipline and he cautioned the government to be prudent about borrowing.

In Malawi, Finance Minister Ken Lipenga was cautiously optimistic about the package, which is still subject to the approval of the IMF Executive board.

"It's exciting news but it's early days yet," Lipenga said.

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Associated Press writer Raphael Tenthani in Blantyre, Malawi contributed to this report.