IMF approves more than $55 million for poverty programmes

The International Monetary Fund (IMF) has approved another three-year flow of funds to Malawi after improved economic performance. Under the Poverty Reduction and Growth Facility (PRGF) the IMF board on Friday gave the nod to about US $55.9 million to support the government's economic reform and poverty alleviation programmes. The PRGF is the IMF's concessional loan facility for low-income countries. "After several years of economic deterioration, significant progress has been made in restoring macroeconomic stability, strengthening economic growth and stabilising the government's domestic debt," noted Takatoshi Kato, IMF's deputy managing director and acting chairman. Up to 80 percent of Malawi's development budget is provided by donors, and the country faces enormous challenges related to poverty, food insecurity, HIV/AIDS and the capacity to deliver services. Two-thirds of Malawians live in poverty. Although the economy improved last year, this year's prospects have been affected by a dry spell that has cut maize production by an estimated 25 percent. "In the light of the recent drought conditions, food security is an overarching priority of the government", commented Kato. According to the IMF, food prices are expected to rise later in the year, while depreciation of the Malawian kwacha against the US dollar - from MK109 in February to MK124 in July - was expected to affect non-food prices. The first disbursement under the PRGF arrangement will amount to about $7.9 million. The previous PRGF arrangement for Malawi expired in December 2004.