Malawi and the International Monetary Fund
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The International Monetary Fund (IMF) has operated in Malawi since 1965.
History
Malawi joined the International Monetary Fund on July 19, 1965. Malawi has since concluded 13 arrangements (loans) with the fund. The first came on October 31, 1979 and the thirteenth on July 23, 2012. Among the 661,749 Special Drawing Rights agreed on these 13 loans, Malawi has drawn 493,679 SDRs, of which 149,741 SDRs are still pending. Malawi's quota amounts to 138.8 million Special Drawing Rights.[1]
Constituency
Malawi belongs to Africa Group 1, the IMF's largest constituency, along with 22 other nations.[2] The constituency as a whole yields 2.97 percent of the collective voting power within the fund and is egalitarian, unlike other large constituencies, As of 2017 Maxwell M. Mkwezalamba, Malawi's former Minister of Finance, serves as the constituency's Executive Director,[3] a position that rotates among members.
Arrangements
On July 23, 2012, the IMF's Extended Credit Facility (ECF) approved a loan of 138,800 SDRs, of which Malawi has drawn 119.3 million.[1] Malawi sought financial assistance from Fund, because the nation was facing a budget crisis. In July 2012, the ECF issued a loan of $156 million to prevent the depletion of the country's international reserves.[4] Goals of the fund's intervention included reducing inflation, increasing foreign-exchange reserves, and enhancing financial services to improve the nation's balance of payments and encourage foreign investment. As a result of a drought caused by El Niño weather patterns, the Fund approved a 49.2 million dollar disbursement.[5] Because of a reduction in maize production by about 12%, intervention was necessary to prevent maize price inflation.[6] The United Nations World Food Program estimated that the reduction in the production of maize and other crops has left over 6.5 million Malawians susceptible to food insecurity.[7] The IMF approved this additional disbursement in order to alleviate the food shortage.[8]
Heavily Indebted Poor Countries
Founded by the IMF and the World Bank in 1996, the Heavily Indebted Poor Countries organisation (HIPC) extended debt forgiveness to the world's most indebted nations. Among those 36 countries who met the requirements of this initiative include Malawi, Afghanistan and Haiti.[9] Malawi was the 20th country to be approved as a participant in the initiative, and once approved, Malawi became eligible for further debt relief from the World Banks IDA, the IMF and the African Development Fund (AfDF) under the Multilateral Debt Relief Initiative (MDRI)."[10]
References
- ^ a b "Financial Position in the Fund for Malawi as of May 31, 2017". www.imf.org. Retrieved 2017-06-09.
- ^ "IMF Executive Directors and Voting Power". www.imf.org. Retrieved 2017-06-09.
- ^ "Maxwell M. Mkwezalamba , International Monetary Fund [IMF] - Leadership Profiles". www.leadershipdirectories.com. Retrieved 2017-06-09.
- ^ "IMF Survey: IMF Lends Malawi $156 Million to Help Boost Foreign Reserves". www.imf.org. Retrieved 2017-06-09.
- ^ "Malawi Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption". www.heritage.org. Retrieved 2017-06-09.
- ^ "Malawi declares a state of emergency over drought". www.aljazeera.com. Retrieved 2017-06-13.
- ^ "Malawi | World Food Programme". www1.wfp.org. Retrieved 2017-06-13.
- ^ "IMF Executive Board completes Seventh and Eighth Reviews under Malawi's ECF Arrangement and Approves US$ 76.8 Million Disbursement". www.imf.org. Retrieved 2017-06-09.
- ^ "Factsheet - Debt Relief Under the Heavily Indebted Poor Countries (HIPC) Initiative". www.imf.org. Retrieved 2017-06-09.
- ^ "Press Release: World Bank and IMF Support Malawi's completion point under the enhanced HIPC Initiative and approve debt relief under the Multilateral Debt Relief Initiative". www.imf.org. Retrieved 2017-06-11.