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IMF steps up economic support to Malawi

Jan 04 2013 15:00 Sapa-AFP
Joyce Banda

(Picture: AFP)

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Blantyre - Christine Lagarde, the managing director of the International Monetary Fund (IMF), arrived in impoverished Malawi on Friday on a three-day official visit to "support the President and government" over its economic recovery programme.

"I am coming to see how we are partnering with the government and how better we can support economic reforms that are being implemented," Largarde said on arrival.

She is due to hold private talks with President Joyce Banda later on Friday. She will also hold meetings with the private sector, the central bank and technocrats.

Malawi's economy, powered by agriculture and aid inflows, is recovering from global aid suspensions and President Joyce Banda has instituted an economic recovery plan.

The IMF, one of the main backers of Malawi's economic reforms, gave Malawi a three-year $157m loan package in June to help fix the economy.

Malawi's ties with the global lender broke down last year after it suspended a $79.4m credit facility meant to cushion chronic foreign exchange shortages during the administration of the late president Bingu wa Mutharika, who died in April last year from heart failure.

Banda, who had been vice president, launched a raft of measures including an economic recovery plan to lure back donors who provide up to 40% of the country's development budget and salaries for its nearly 170 000 civil servants.

Banda often says she found the country's agriculture-powered economy in a "total mess" and the country "needed to both restore and consolidate macro-economic stability and the establishment of strong foundation for diversified and inclusive growth".

Under Mutharika, relations between Malawi and the agency had become tense after he constantly refused to devalue the currency as the IMF had advised, arguing it would trigger inflation and hurt the poor. In the country, 39% of the 13 million citizens live on less than a dollar a day.

Several key donors, including former colonial power Britain, suspended aid to the country, citing concerns about growing authoritarian tendencies in Mutharika's government.

 

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