The IMF said it had discussions last week with Malawian authorities over their request for financial support under its new “Food Shock Window” – which aims to help countries with balance-of-payments problems cope with food shortages and rising costs – and for a staff-monitored program.
He did not say how much money Malawi had requested.
The support would aim to meet the southern African country’s urgent financing needs and support reforms, while restructuring debt which reached 59% of GDP last year, the IMF said in a statement. He added that there would be further discussions this week on the sidelines of the annual meetings of the IMF and the World Bank.
Malawi, which depends on donors, has experienced severe shortages of foreign exchange and in May devalued its kwacha currency by 25% against the dollar.
“Discussions will continue (…) with a view to making sufficient progress to be able to present the authorities’ emergency financing request (…) to the IMF’s Executive Board as soon as possible”, indicated the IMF.
“We were reassured by the authorities’ commitment to advancing structural reforms and steering the country towards macroeconomic stability and a sustainable debt trajectory, notably through the ongoing debt restructuring process.”
Last year, external debt accounted for 31.9% of Malawi’s GDP, the IMF said in a December 2021 report. In 2020, it stood at $3.76 billion, with creditors such as the China, India and Afreximbank.
If its application is approved by the fund‘s board, Malawi would be the first African country to obtain financing under the IMF’s new emergency lending program which came into effect last month.
A request from Ukraine for emergency financing of $1.3 billion was approved by the IMF last week.
In June, the IMF said Malawi had requested an extended four-year credit facility to deal with balance-of-payments difficulties.
The fund said in June that restoring debt sustainability and resolving a case involving alleged misreporting of foreign exchange reserves were prerequisites for IMF support.
(Reporting by Bhargav Acharya in Bengaluru and Rachel Savage in Johannesburg, Editing by Alexander Winning and Mark Heinrich)