International Monetary Fund (IMF) managing director Kristalina Georgieva says debt unsustainability makes the IMF’s entry into Malawi more difficult.
The IMF has since halted talks with Malawi on the new Extended Credit Facility (ECF) over concerns about the country’s public debt which is at K5.8 trillion.
Speaking in an interview with CNBC-TV18 in India recently, Georgieva noted that Malawi has no food and no fuel but it is difficult for IMF to intervene because the country’s debt is unsustainable.
She then urged countries like China and the private sector to provide debt relief to low income countries so that the IMF can help such countries.
Malawi wants to secure a new ECF with IMF but, according to IMF Country Manager in Malawi Farayi Gwenhamo, the talks have been suspended.
“We had some discussions, online, last week and we were supposed to continue this week with the in-person part of the mission. But now this is on hold. We had to reach a resolution around the debt sustainability issues,” Gwenhamo told Daily Times Newspaper.
However, Minister of Finance Sosten Gwengwe said it is government which is yet to confirm the IMF mission to Malawi.
“There is no point in having an IMF mission if they cannot accept a debt treatment that does not require the default element. There is a stand-off on this matter this far. We are continuing to engage in more donor inflows to lessen the debt treatment,” Gwengwe said.
Malawi’s economic situation has worsened this year amid a shortage of forex which has affected the importation of fuel. A sharp rise in prices of food and other necessities and low income levels have also left many Malawians suffering under the leadership of President Lazarus Chakwera.
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