The International Monetary Fund has granted Malawi a waiver after the country misreported its international reserves three years ago, the Bretton Woods institution announced on Thursday.
In a statement, the IMF said the Reserve Bank of Malawi (RBM)’s gross reserve assets were deliberately overstated between June 2018 and June 2019 contrary to provisions of an agreement reached at the signing of the three-year Extended Credit Facility (ECF) arrangement in April 2018 between the Fund and the Malawian authorities.
Under the agreement, it was agreed that gross reserves would exclude “pledged term deposits and assets through contracting short-term swaps”. These were, however, included in the total gross reserves that were reported to the IMF by the RBM, leading to the suspension of the ECF.
President Lazarus Chakwera’s government, which took office in June 2020, responded by dismissing the former RBM governor in July 2020 and ordered a special audit of RBM’s foreign exchange reserves for the first three reviews under the 2018 ECF arrangement.
“In view of the authorities’ commitment to provide timely and accurate data to the IMF in the future and the remedial actions already taken, the executive board granted waivers for the non-observance of the performance criterion on the floor on NIR (net international reserves),” IMF deputy managing director Bo Li said.
He said the remedial actions taken by the Malawian authorities “and the additional corrective measures to be undertaken are contributing to rebuilding the reserve assets of the RBM and are, therefore, appropriate to achieve the objectives under the 2018 ECF arrangement.”
Earlier this year Malawi also requested a four-year extended credit facility to help with balance of payments difficulties.
The IMF and Malawi last month reached a staff-level agreement on up to US$88.3 million in emergency financing under a new IMF arrangement called the “Food Shock Window”.
JN/APA