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Introduction
- Malawi’s economic performance since the late-1970s has been diverse with repeated attempts at macroeconomic stabilization and adjustment, interrupted by policy slippages and exogenous shocks. Important structural reforms have included improving opportunities for smallholder farmers and reducing the oligopolistic nature of the economy. Moreover, the country underwent a significant political reform in 1994 when the first multi-party elections were held. But putting the public finances on a durable footing and
tackling both domestic and external imbalances has proved elusive. Much of the country is mired in poverty, social indicators are amongst the lowest in sub-Saharan Africa, and food security is yet to be attained.
- The Fund has remained engaged with Malawi through much of this period, with a series of financial arrangements and staff-monitored programs. These included three Stand-by Arrangements (SBA), 1979–83; an Extended Fund Facility (EFF), 1983–86; an Enhanced Structural Adjustment Facility (ESAF), 1988–94; a Standby Arrangement (1994); an Enhanced Structural Adjustment Facility (1996–1999); and a Poverty Reduction and Growth Facility (PRGF), 2000–2004 (Table 1).
- This report presents an ex-post assessment of Malawi’s longer-term program engagement with the Fund. Given the length of the engagement, and the important political change that took place in the mid-1990s, much of this report focuses on performance during the programs supported by the 1995 ESAF and 2000 PRGF arrangements. Section II provides
an overview of economic developments. Section III reviews achievements and shortcomings in some key macroeconomic and structural areas. Section IV discusses the role of the Fund in this process, including program design, conditionality, and collaboration with the World Bank. The report concludes in Section V with the main lessons and implications for possible future Fund engagement.
Table 1. Malawi: IMF Arrangements, 1979-2004
| Arrangement |
Approval date |
Scheduled end date |
Actual end date |
Approved (SDR, millions) |
Disbursed (SDR, millions) |
| SBA |
10/31/79 |
12/31/81 |
5/8/80 |
26.3 |
5.4 |
| SBA |
5/9/80 |
3/31/82 |
3/31/82 |
49.9 |
40.0 |
| SBA |
8/6/82 |
8/5/83 |
8/5/83 |
22.0 |
22.0 |
| EFF |
9/19/83 |
9/18/86 |
8/5/86 |
81.0 |
57.0 |
| SBA |
3/2/88 |
5/30/89 |
5/30/89 |
13.0 |
9.3 |
| ESAF |
7/15/88 |
9/29/92 |
3/31/94 |
67.0 |
67.0 |
| SBA |
11/16/94 |
6/30/95 |
6/30/95 |
15.0 |
12.7 |
| ESAF |
10/18/95 |
12/16/99 |
12/16/99 |
51.0 |
51.0 |
| PRGF |
12/21/00 |
12/20/03 |
12/20/03 |
45.1 |
12.9 |
Source: International Monetary Fund
Footnote:
- The staff team was headed by Atish Ghosh (PDR) and included Magnus Alvesson (AFR), Li Cui (PDR), Gamal El-Masry (AFR), and Christiane Roehler (FAD).
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