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.