(Reuters) – The International Monetary Fund said on Tuesday that Malawi had requested emergency funding as it struggles with foreign currency shortages and tries to make progress with a debt restructuring.
The IMF said it held discussions last week with Malawian authorities on their request for financial support under the 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 programme.
It did not say how much money Malawi had asked for.
The support would aim to address the southern African country’s urgent financing needs and support reforms, while it restructures debt that reached 59% of GDP last year, the IMF said in a statement.
It added there would more talks this week on the sidelines of the IMF-World Bank Annual Meetings.
Donor-dependent Malawi has experienced acute foreign currency shortages 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’ 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 advance structural reforms and to steer the country towards macroeconomic stability and a sustainable debt path, including through the debt restructuring process underway.”
Last year external debt accounted for 31.9% of Malawi’s GDP, the IMF said in a report in December 2021.
In 2020 it was $3.76 billion, with creditors including China, India and Afreximbank.
If its request is approved by the fund’s board, Malawi would be the first African country to get funding under the IMF’s new emergency lending programme that came into force last month.
A request from Ukraine for $1.3 billion in emergency financing was signed off by the IMF last week.
In June, the IMF said Malawi had requested a four-year extended credit facility to help 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 pre-requisites for IMF support.
(Reporting by Bhargav Acharya in Bengaluru and Rachel Savage in Johannesburg,; Editing by Alexander Winning and Mark Heinrich)
