IMF offers assurances to Malawi’s donors to unlock funds

Malawi’s finance minster Ken Lipenga has said the  International Monetary Fund has offered to write  letters of comfort to allow  donors to release funds immediately to beef up the country’s shrinking  reserves.

Malawi’s current reserve position is at one month import cover – far less than the recommended three months cover. 

“The IMF has pledged to issue letters of comfort to help our development partners to support us immediately before the final programme is agreed upon because we have responded very quickly and they are fast racking everything aswell,” Lipenga said.

Lipenga said he needs the money within a matter of weeks but could not give the exact numbers in a interview with Reuters later.

“Our initial estimates were that we needed between $300 million and $500 million to allow us to devalue and have a certain critical mass of reserves but those figures have been reviewed and may go up or down,”Lipenga said.

Andrew  Mwaba the resident representative of the African Development Bank, who also chairs the donor group,  confirmed the IMf decision saying the World Bank and his bank have indicated to act quickly.

“The IMF letters of comfort will allow us to intervene immediately and so far the African Development Bank and the World Bank have indicated that we will be expedite the release of funds,” Mwaba said

President Joyce Banda is trying to restore a flow of overseas aid cut under her predecessor’s rule, leaving a gaping hole in a budget that relies on overseas assistance for about 40 percent of its funds.

Last week Banda  announced  she had asked the African Union not to invite Sudanese President Omar al- Bashir to the African heads of state summit in Malawi in July  because of the economic implications his presence may have with Malawi’s donors

late president Bingu wa Mutharika, who died last month after a heart attack, allowed Bashir to attend a regional trade summit last year, citing “brotherly coexistence” and consequently became one of the reasons that the United States decided to suspend the $350 million energy grant.

The move further strained ties with most European nations, who had already frozen projects in Malawi due to Mutharika’s suspected human rights violations and growing autocracy. Mutharika died last month of a heart attack.

Malawi central bank justifies devaluation of kwacha

Reserve Bank of Malawi on Monday devalued the kwacha by about 50 percent to appease the International Monetary Fund and unlock much needed aid held up by the country’s key donors.

 The Fund suspended a $79 million aid facility due to conflict with previous President Bingu wa Mutharika. The IMF had called for a 50 percent cut in the value of the kwacha.

The  Bank of Malawi said it was also prompted to cut the kwacha because most foreign transactions were being conducted at a black market rate nearly double the official rate. 

The kwacha was trading at K250 to the greenback on Monday from the previous peg of 168 and closer to the black market rate of about 275.

“At K250 per dollar the exchange rate is well adjusted as the black market is certainly under-devalued,” the Reserve Bank of Malawi said in a statement.

“Most importantly, it should also, together with the liberalisation of foreign exchange market, contribute to government’s efforts to reach early agreement with the IMF which should leading to unlocking donor flows in the next few months,” it said.

 The bank will allow international tourists to settle bills in any major currency. 
    Dollars earned through tobacco sales, which usually account for 60 percent of Malawi’s foreign currency revenues, can now go through commercial banks instead of through the central bank.

    ”All forex restrictions announced last year in August on forex bureau have been suspended since this is now a free floating foreign exchange regime,” Charles Chuka, the central bank governor, told reporters

Deputy governor economic services Dr Naomi Ngwira added that the price adjustments expected with the devaluation will be minimal and therefore inflation will ease up minimally.
   
Mutharika, who died last month of a heart attack, had blocked the reevaluation of the currency because of the impact on the poor masses. This led to the  suspension of budget support which traditionally accounts for about 40 percent of the budget.

Former colonial master Britain and major aid donor the United States froze aid packages worth nearly $1 billion in the country with an estimated GDP of $5.6 billion.

Petrol, drugs and other items purchased abroad with hard cash grew scarce with people lining up for days for a few litres of gasoline. Goods for the domestic market were sold over the border to earn foreign currency.

Malawi tells African Union not to invite Bashir

Malawi Army Commander welcomes al-Bashir when he visited Malawi for a trade summit

Malawi President Joyce Banda on Friday said  she  had asked the African Union to stop Sudanese President Omar Hassan al-Bashir from attending a summit in Lilongwe this July.

Bashir is wanted by the International Criminal Court on genocide charges for crimes he allegedly committed between 2003 in the Darfur region.

“I have written them because of the economic implications this may have on Malawi,” she told a news conference.

“Let the AU decide on his position. He (Bashir) should forgive us this time as we are struggling to fix the economy.”

Banda is trying to restore a flow of overseas aid cut under her predecessor’s rule, leaving a gaping hole in a budget that relies on overseas assistance for about 40 percent of its funds. 

Banda’s Party: Killing opposition in Malawi

Atupele Muluzi, left,greets leader of opposition John Tembo.

Malawi’s new ruling party led by first woman President Joyce Banda has now become the new attraction in town with politicians flocking to it like ducks to water

Many,including some former ministers want to join Banda’s People’s Party (PP), which not too long ago was being described as a briefcase party, a party of disgruntled politicians.

According to PP officials over 80 applications from late Mutharika’s party – DPP have been received. From the United Democratic Front (UDF), a party that became popular for ousting the single party rule of late dictator Kamuzu Banda, 98 members including some legislators have joined PP.

PP claims that even former ministers like Goodall Gondwe, Vuwa Kaunda were among the applicants to join Banda’s party but have been rejected,  a claim both dismissed as propaganda.

Malawi Chief Justice faces calls to resign

Malawi’s law society meet this week to among other things call for the  resignation of the country’s Chief Justice Lovemore Munlo following revelations by President Joyce Banda that he was part of the alleged coup plotters.

Banda, the first woman head of state in southern Africa, made the  accusations in an interview with the Guardian– one of Britain’s leading newspapers.

 Banda disclosed she learnt in her official capacity about the attempted coup on the presidency by some members of the Judiciary and the Cabinet following her predecessor’s death.

The President said a Cabinet minister—who was part of the judicial and Cabinet ministers’ meeting to machinate the swearing-in of Peter Mutharika after the death of his brother—came to officially brief her at her residence in Lilongwe. 

 ”He [the minister] was telling me in an official capacity at the presidential residence. So, I told the [UK] newspaper as it was relayed to me,” in an exclusive interview with the Nation yesterday.

The Malawi Law Society (MLS) secretary Bright Theu said that the lawyers  have scheduled as a subject for discussion at a MLS executive meeting later this week. But he refused to disclose the agenda of the meeting.

But other leading lawyers who asked for anonymity want the Chief Justice to resign his position 

“Our position when we meet will definitely be that the CJ resigns…he cannot continue being the head of the judiciary when he conspired with others to ignore what the Constitution says on succession in the event of the President’s death,” a leading lawyer said.

The President also confirmed that when all this was happening, she telephoned Army Commander General Henry Odillo, asking if she could rely on his support. She said Odillo obliged and stationed troops around her house.

Malawi minister Phoya apologises to Chewa chiefs

Lands Minister Henry Phoya has apologised to powerful chiefs for comments he made when justifying why he left Malawi Congress Party (MCP), largely supported by the Chewas.

Justin Malewezi, chairman of the Chewa Heritage Foundation, asked Phoya on behalf of the chiefs to apologise.

Phoya last Friday said he left MCP because he was told to go to Gule Wamkulu camp for initiation because only those who are initiated to Gule Wamkulu join the party.
 
Gule Wamukulu  is a big  masked Chewa dance  widely believed to be associated with magic.

“I didn’t say anything that could be construed to mean that I was insulting   the Chewa  culture. However, in the interest of well meaning Malawians especially those from the Chewa culture background who find my statement to be offensive then I unconditionally apologise,” Phoya said in a statement.
 
The Chewa people are widely believed to be the stronghold  of Malawi’s oldest political party — MCP.

Chewas demand Phoya apology

 
Justin Malewezi, chairman of the Chewa Heritage Foundation, has asked newly appointed Minister of Lands, Housing Henry Phoya to apologise  for offending Chewas on Friday when he justified why he  left Malawi Congress Party( MCP) to join People’s Party – the ruling party.

Phoya last Friday said he left MCP because he was told to go to Gule Wamkulu camp for initiation because only those who are initiated to Gule Wamkulu join the party.
 
Gule Wamukulu  is a big  masked Chewa dance  widely believed to be associated with magic.

“We are asking Phoya to apologise to us, the Chewas, because he has offended us. If he can do that, all Chewa chiefs and people will be happy,” said Malewezi who is also former vice president under the Muluzi administration.
 
” He may have said that out of excitement, but he must apologise for what he said,” Malewezi said during a press conference in Lilongwe.

“Phoya has his superiors. We cannot force him to apologise but if he doesn’t apologise, we will take up the matter to his superiors. We don’t think his superiors could be happy with what he said,” said Malewezi.
 
The Chewa people are widely believed to be the stronghold  of Malawi’s oldest political party — MCP.

If Phoya doesn’t apologise, it could not go down well with President Joyce Banda who is trying to win the province for 2014 when she contests in presidential polls.

Malawi asks for new IMF aid programme

By Mabvuto Banda

WASHINGTON (Reuters) – Malawi has requested a new financing program from the International Monetary Fund necessary to unlock needed aid from Western donors, a senior IMF official said on Friday.

The IMF’s mission chief to Malawi, Tsidi Tsikata, told Reuters discussions on IMF support had begun on the sidelines of meetings of the IMF and World Bank in Washington.

He said an IMF mission would travel to Malawi before the end of May to discuss details of an economic program, which would be supported by an IMF loan.

The IMF had suspended a three-year $79 million loan after the program went off track when the government failed to devalue its kwacha currency and implement public finance management reforms.

“We should be going back to Malawi in a matter of weeks, at least before the end of May … but what we need is some clarity on the 2012/13 budget and we want to give the authorities some time to do that,” Tsikata said.

“We know how quickly Malawi wants the program but what is important to us is the formation of the budget,” he added.

Malawi’s new president, Joyce Banda, a prominent women’s rights campaigner, was sworn in earlier this month after the sudden death of President Bingu wa Mutharika, 78, from a heart attack, raising hopes for a fresh start for the aid-dependent country.

Mutharika was blamed for an economic crisis that stemmed from a diplomatic dispute with Britain. After clashing with Mutharika over his economic policies and heavy-handed repression of dissent, Britain and other donors froze aid worth some 40 percent of government spending.

An IMF program will likely help free up aid from the United States and Britain worth nearly $1 billion.

The country has not received budget support from donors since January last year, creating a budget gap of $121 million in the current fiscal year which ends in July.

Pressure has also been building on its currency, forcing authorities to devalue by 10 percent last year. The IMF has said too much of the state’s precious foreign currency reserves are being used to defend the kwacha.

Banda’s first goal since taking office earlier this month has been to restore the confidence of donors.

“The president has expressed her desire to work with us to return to a path of macroeconomic reform and we very much look forward to doing that,” said Antoinette Sayeh, IMF director of the IMF’s Africa Department, told Reuters on the sidelines of the IMF-World Bank meetings.

FDI in Africa jumps by 25 pct

Economic and social conditions are improving in Africa with maternal deaths falling by 26 percent, and HIV infections stabilising good news to a continent which rarely hits headlines for achievements made

These are not the only encouraging indicators the continet is showcasing on the global stage.

According to the World Bank, foriegn direct investment jumped by 25 percent to an estimated $35.6 billion, after declining sharply in 2011 and 2010.

“The business climate is also improving and favourable economic prospects are attracting investment inflows in telecommunications, real estate, and retail sectors…remittances have rebounded aswell posting a high of $23 billion in 2011,” the World Bank said in a breifing on Friday.

World Bank says jobs shifting from East Asia to Africa. Is Africa ready?

 The World Bank says opportunities for job creation are emerging for Africa as East Asia is shedding manufacturing jobs because of fast rising labuor costs.

African policymakers are keen to seize this opportunity and take the agenda forward at the country level.

 How can governments help the private sector develop labuor-intensive industries that capitalize on country endowments and tap an economy’s comparative advantage?