The IMF said it had discussions last week with the 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 shortages. food and rising costs – and for a staff-supervised program.
She did not specify the amount of aid requested by Malawi.
The aid would be aimed at meeting the southern African country’s urgent financing needs and supporting reforms as it restructures its debt which reached 59% of GDP last year, the IMF said in a statement. He added that further discussions would take place this week on the sidelines of the annual meetings of the IMF and the World Bank.
Malawi, which depends on donors, has experienced serious foreign exchange shortages and in May devalued its currency, the kwacha, by 25% once morest the dollar.
“Discussions will continue…with a view to making sufficient progress to present the authorities’ request for emergency financing…to the IMF’s Executive Board as soon as possible,” the IMF said.
“We were reassured by the authorities’ commitment to advancing structural reforms and steering the country towards macroeconomic stability and a sustainable debt trajectory, including through the ongoing debt restructuring process.”
Last year, external debt represented 31.9% of Malawi’s GDP, the IMF said in a December 2021 report. In 2020, it stood at $3.76 billion, with creditors including 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 loan programme, 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 applied for a four-year extended credit facility to help resolve its balance of payments difficulties.
The fund said in June that restoring debt sustainability and resolving a case of alleged misrepresentation of foreign exchange reserves were prerequisites for IMF support.
