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Wednesday, 29 May, 2002, 14:35 GMT 15:35 UK
IMF denies telling Malawi to sell food
Starving family in Malawi
Three-quarters of Malawians are short of food
The International Monetary Fund (IMF) has denied that it recommended the sale of Malawi's strategic maize reserves just before a crop failure occurred.

President Bakili Muluzi declared a state of national disaster in April and has asked for $21m (14.4m; 22.6m euros) in international assistance for food relief.

Up to 76% of Malawians lack food and more than 300 people are reported to have died of hunger this year.

Malawi Agriculture Minister Aleke Banda
Banda says foreign donors urged the grain sale
"We did not instruct the Malawi government or the NFRA (National Food Reserve Agency) to dispose of the reserves," the IMF representative in Malawi, Girma Begashaw, told Reuters news agency.

"We have no expertise in food security policy."

Agriculture Minister Aleke Banda reportedly said last week that the IMF had encouraged the government to sell at least part of the reserve in 2000 to reduce debt.

"International donors have argued that we do not have to keep reserves at those (high) levels," Mr Banda told the BBC's World Business Report.

Food for thought

The IMF's Mr Begashaw countered that Malawi sold the maize after advice from a food consultant, hired by the government in a European Union-funded project.

He added that the country cut the reserve by two-thirds on the basis of inaccurate crop estimates.

"They thought they would have a good harvest in 2001, so they went ahead and sold all the 167,000 metric tonnes in the reserve," Mr Begashaw said.

"They did not even keep the 60,000 tonnes that their own policy required them to keep," he said.

Finance Minister Friday Jumbe told Reuters last week the government had been urged by the IMF and other donors to settle commercial debts.

Malawi then sold the food reserve to pay off a one-year commercial loan taken in 1999 to establish the reserve, he added.

Despite the food shortages, the IMF has suspended Malawi's poverty-reduction programme until it cuts government spending in its budget in June.

Grain sales

Malawi produced more than two million tonnes of maize in 1999, a national record after free seed and agricultural goods were given to three million farmers.

Mr Banda said the forecasts had predicted another bumper harvest from March 2001 but the crop failed.

Mr Jumbe said the reserve was sold in the last six months of 2000 at an average loss of more than 50%.

When news broke in January 2001 that the next crop would be well below average, prices jumped 400%.

The government called on Monday for tenders for 40,000 tonnes of locally grown maize to begin rebuilding the strategic reserve under an EU-financed project.

Britain will be a major sponsor of this year's programme to distribute free maize seeds and fertiliser to farmers, Mr Banda said on Wednesday.

Save the Children's Brendan Paddy
"We know that the IMF has operated in this way in other circumstances"

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See also:

22 May 02 | Africa
06 Mar 02 | Africa
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27 Feb 02 | Africa
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