Malawi: IMF Approves Financing Under Rapid Facility

By Joseph Dumbula [caption id="attachment_102440" align="alignnone" width="976"] President Chakwera[/caption] There is a sigh of relief for the Malawi government after the Executive Board of the International Monetary Fund has now successfully approved a disbursement of US$88.327 million (MK 91 Billion) to the Southern African nation under the Food Shock Window of the Rapid Credit Facility. The approval means that Malawi, which neighbors Mozambique, Zambia and Tanzania is the first low-income nation to receive financing under this new mechanism. The package 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. Malawi is one of the 48 countries the IMF identified as worst affected by the global food crisis aggravated by the war in Ukraine. The news comes days after the IMF Executive Board approved a Staff-Monitored Program. This informal agreement with the IMF should enable the Malawian authorities to build a track record of policy implementation before it possibly implements an IMF-supported program. The deputy managing director and acting chair of the IMF executive board strongly invited the authorities to "to swiftly implement [its] debt restructuring strategy", with the aim "to bring Malawi back to moderate risk of debt distress in the medium term." Bo Li, IMF Deputy Managing Director and acting chair, noted in a statement that 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.