IMF Approves $88.3 Million For Malawi

The International Monetary Fund said its executive board has approved an $88.3 million disbursement to Malawi under the new “food shock window” emergency lending facility

The lending facility was launched in response to food price spikes and shortages caused by Russia’s war in Ukraine.

It provides, for a year, a channel for emergency Fund financing to member countries that have urgent balance of payment needs due to acute food insecurity, a sharp increase in their food import bill, or a shock to their cereal exports.

The IMF said the executive board assessed that a previously approved staff-monitored policy program for Malawi linked to the food shock loan is “sufficiently robust to meet the stated objectives” and was expected to build a track record of policy implementation that could lead to a more formal IMF “upper credit tranche-quality” loan arrangement.

“Malawi is facing a challenging economic and humanitarian situation, with foreign exchange shortages and an exchange rate misalignment leading to a sharp decline in imports including fuel, fertilizer, medicine, and food,” IMF Deputy Managing Director, Bo Li said in a statement.

Debt Restructuring Strategy
Li said that while debt is sustainable on a forward-looking basis, however, the risks to the program are high and it was important to swiftly implement a debt restructuring strategy with the aim of bringing Malawi back to moderate risk of debt distress in the medium term.

Meanwhile, Malawi is one of the 48 countries the IMF identified as worst affected by the global food crisis aggravated by the war in Ukraine.

REUTERS/CO