The food shock loan, which is a component of the IMF’s Rapid Credit Facility, would aid the east African nation in addressing immediate balance-of-payments issues brought on by rising food import and fertilizer costs as well as a dropping currency, according to the IMF.
Bo Li, the IMF’s deputy managing director, said in a statement that “Malawi is confronting a tough economic and humanitarian crisis, with foreign exchange shortages and an exchange rate mismatch leading to a steep fall in imports like petroleum, fertilizer, medicine, and food.”
While debt is manageable in the long run, Li said that program risks are significant and that it is crucial to quickly put a debt restructuring plan into action.
“The trustworthy process under way to restructure the government’s debt to commercial creditors, which by itself would restore debt sustainability