IMF says ready to work with Malawi on restoring aid
* IMF program with Malawi "went off track" - IMF VP
* Malawian officials seeking to renegotiate frozen aid
By Pascal Fletcher
WASHINGTON, Sept 21 (Reuters) - The International Monetary Fund is ready to discuss working with Malawi to try to get its stalled IMF program back on track, the fund's vice-president for Africa Antoinette Sayeh said on Wednesday.
The IMF had approved a 3-year $79.4 million facility for the small southern African state in February last year but the program was hit by the government's initial failure to devalue the Malawian kwacha and implement public finance management reforms, among other issues.
Malawi, which subsequently devalued the kwacha currency in August, has relied heavily on foreign donor funds. But former colonial ruler Britain, its biggest bilateral donor, suspended aid worth $550 million in May over a diplomatic spat.
Malawian officials have said the country will seek to renegotiate frozen aid at the meetings in Washington this week of the IMF and the World Bank.
Sayeh told Reuters the fund would be holding discussions with the Malawian delegation about the stalled IMF program.
"The program went off track ... in a significant way and we certainly want to be helpful to Malawi in trying to get them to return it to track," she said.
President Bingu wa Mutharika has faced street riots by protestors who accuse him of ignoring civil liberties and damaging the economy, and 20 anti-government demonstrators were killed by security forces during protests in July.
Sayeh said the IMF was ready to listen to proposals from the Malawian government.
"The situation has certainly deteriorated in a big way and Malawi also has a lot of work to do in restoring its relationships with key donors, which is an important task," she said.
But she said it was too early to give further details of the discussions. "It's quite early days, they've just arrived and we're just starting to talk to them," Sayeh said.
"Malawi of course had in the past made very good progress. ... We certainly want to help them to continue to make that progress," she added. (Reporting by Pascal Fletcher; Editing by Richard Chang)
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