CAMA asks Govt for an update on implementation of IMF’s ECF
Consumers Association of Malawi (CAMA) has observed that the Extended Credit Facility (ECF) approved by the International Monetary Fund (IMF) was meant to support the Malawi Government’s commitment to economic reforms but the country “continues to face challenging macroeconomic environment”.
Thus consumer watchdog body is requesting government for an update on the implementation of ECF, following several economic factors that resulted in “unsustainable domestic and external borrowing and adverse impacts of multiple external shocks, which continue to widen the macroeconomic imbalances, including protracted balance of payments”.
In a public statement issued today, August 8, CAMA’s Executive Director, John Kapito highlights that the main goal for the ECF was to address “macroeconomic stability; creating an environment of low or moderate inflation; stable exchange rate; building a foundation for inclusive and sustainable growth, among others”.
“However, despite the approval of this Extended Credit Facility, we continue witnessing that Government is still struggling to sustain growth and to reduce poverty and food insecurity,” says CAMA.
“During the application and approval of this ECF, Malawians were told that once the approved, shortages of foreign currency and other economic challenges affecting the economy will be stabilised.
“However, after the implementation of the ECF the market is still experiencing shortages of foreign currency, escalating prices of goods and services, and some businesses are closing down their operations creating serious economic negative challenges among consumers.
“Currently, consumers are experiencing major economic challenges such as continued high cost of living where we’ve seen continuation of devaluation of the kwacha, increases in the prices of goods and services, high bank interest rates and lack of foreign exchange in all banks — which has created the growth and expansion of the parallel financial market.”
Kapito describes these negative developments as “economic coups that are happening as a result of the unstable financial stability, which are creating serious challenges that have negative repercussion raising serious questions against the effectiveness and success of the ECF”.
“The absence of information from Government or Ministry of Finance is creating a lot of panic and uncertainty to consumers as they do not see an end to the current economic challenges that they are facing.
“The Government is still having serious challenges to maintain provisions of basic public goods and services, such as health, food security, roads infrastructure etc.
“While at the same time the Government continues to borrow from both domestic and external financial institutions and this is creating more pressure on the exchange rates and prices of goods and services on the market.
“We are therefore requesting the Ministry of Finance & Economic Planning to provide an update on the implementation of the ECF and any other economic reforms that the Government is undertaking.”
