Malawi: Second Review Under the Staff-Monitored Program with Executive Board Involvement and Request for an Arrangement Under the Extended Credit Facility-Press Release; Staff Report

Author: International Monetary Fund. African Dept.

Malawi: Second Review Under the Staff-Monitored Program with Executive Board Involvement and Request for an Arrangement Under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Malawi

Volume/Issue: Volume 2023 Issue 375

Publication date: November 2023

ISBN: 9798400259302

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Topics covered in this book

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Banks and Banking , Exports and Imports , Money and Monetary Policy , Public Finance , Business and Economics - Statistics , International - Economics , authorized dealer banks , ECF arrangement , staff appraisal , executive board involvement , financing gap , Debt service , International reserves , Global , Africa , Sub-Saharan Africa

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Summary

Malawi is recovering from a series of shocks. Real GDP is projected to increase by 1.6 percent in 2023, with shortages of foreign exchange still weighing on economic activity. Inflation is expected to average 30.3 percent in 2023 and to start declining next year. The authorities stepped up efforts to meet fiscal targets under the PMB, adjusting expenditure to offset a shortfall in revenue, and containing government borrowing to slow money growth. The Reserve Bank of Malawi (RBM) tightened monetary policy to contain inflationary pressures and resumed foreign exchange auctions. Rebuilding international reserves of the RBM has been slow as access to trade credit has remained limited. The authorities are seeking comparable treatment from all official bilateral creditors. The authorities continue to pursue good faith negotiations with commercial creditors to restructure their external debt and are in arrears on commercial debt while these discussions continue.