Government in trouble
It is believed that the previous administration misreported on several occasions on gross reserve assets and net international reserves for the period between 2018 and 2019, which remains a bone of contention between the IMF and the Tonse Alliance- led administration. On November 21 2018, the IMF completed the first review under the programme and enabled…
Malawi is likely to return about $73.9 million (approximately K64,034,350,000) drawn from the cancelled Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF) if the audit on forex misreporting is proven to be correct, Finance Minister Sosten Gwengwe has said.
Briefing reporters in Lilongwe on Friday, Gwengwe said Ernst and Young of London are finalising the audit, whose results could determine the nature of punishment the country could get from the fund.
But while admitting that repaying back the money is an option on the table, IMF Resident Representative Farai Gwenhamo said the final decision lies with the IMF Executive Board.
According to Gwengwe, the IMF takes issues of misreporting “very seriously” and considers it as theft.
It is believed that the previous administration misreported on several occasions on gross reserve assets and net international reserves (NIR) for the period between 2018 and 2019, which remains a bone of contention between the IMF and the Tonse Alliance-led administration.
The last ECF programme with Malawi was approved on April 30 2018 before it was cancelled mid- 2020. The programme was worth $112.3 million (approximately K97,307,950,000).
On the day of the approval of the programme, Malawi qualified for immediate disbursement of $16 million, with the remaining amount being phased over the duration of the programme subject to semi-annual reviews.
On November 21 2018, the IMF completed the first review under the programme and enabled Malawi to draw $15.4 million (approximately K13,344,100,000).
On November 22 2019, the Executive Board of the IMF completed the second and third reviews of Malawi’s performance under the three-year programme, a development that allowed Malawi to draw $43.3 million (about K28 billion), bringing total disbursements under the arrangement to $73.9 million (approximately K64 billion).
According to Gwengwe, it is likely that Malawi would have to refund the IMF money, if the audit proves that there was some wrongdoing.
He said the Lazarus Chakwera administration commits to transparency and accountability of the reporting.
“We will not cut corners. We will not sugarcoat. We will not misreport.
“We need to be more focused on the economics and not the politics for these reforms to yield the much-needed results. A better economy is good for us all regardless of our affiliations, political, religion or ethnic origin,” Gwengwe said.
When contacted yesterday, Gwenhamo admitted that the authorities have contracted an audit firm to undertake a special audit of Reserve Bank of Malawi (RBM)’s foreign exchange reserves.
“The findings of the audit report and corrective measures being implemented by the authorities will soon be presented to the IMF Executive Board to make a determination of the outcome and follow-up measures,” Gwenhamo said.
In December last year, police arrested former minister of Finance Joseph Mwanamvekha and RBM former governor Dalitso Kabambe for allegedly doctoring financial figures that were submitted to the IMF.
The two are out on court bail.
