The International Monetary Fund (IMF) has approved a US$91 million (K67 billion) Rapid Credit Facility (RCF) for Malawi.
The organisation said on Friday that the money will help Malawi meet the urgent balance of payment (BOP) needs stemming from the COVID-19 pandemic.
IMF noted in its statement that Malawi is being severely affected by the COVID-19 pandemic as spillovers from the sharp global slowdown as well as the economic disruption in the region are weighing on international trade, tourism, remittances, investment, and consumption.
“The authorities have been proactive in mitigating the impact of the pandemic, including through increased spending on health care and social assistance, supporting small and medium enterprises, bolstering farmers’ incomes and ensuring food security through purchase and storage of agricultural harvests, and easing liquidity constraints in the banking system.
“The IMF’s emergency financing under the Rapid Credit Facility will help the authorities meet the large external financing gap and catalyze further assistance from the international community,” said IMF deputy managing director Tao Zhang.
He added that donor support will be critical to close the remaining external financing gap and facilitate the needed interventions to ease the economic and social impacts of the pandemic, while preserving Malawi’s hard-earned macroeconomic stability.
“A widening of the budget deficit is appropriate in the near-term, given the fiscal costs associated with the economic slowdown and critical additional health care and social spending needs, which should be executed transparently and targeted to the most affected parts of society.
“The authorities’ commitment to the audit of COVID-19 related spending is welcome. Once the crisis abates, it will be important to safeguard medium-term debt sustainability by boosting domestic revenue mobilization and enhancing public financial management,’’ Zhang said.
Malawi has recorded 37 coronavirus cases and there have three deaths and 9 recoveries.