IMF reaches deal with Malawi for $88m emergency financing

The IMF said on Friday it had reached a service-level agreement with Malawi for emergency financing of up to $88.3 million to meet the needs of the food crisis, making it the first low-income country to enter into such an agreement.

The disbursement is part of the International Monetary Fund’s Food Shock Window, a new emergency lending facility to help countries struggling with acute food insecurity as prices rise globally. The facility, approved in September, comes as countries grapple with climate shocks, conflict and the fallout from the Covid-19 pandemic – which has disrupted food production and distribution. “This emergency financing… will help Malawi meet urgent balance of payments needs related to the global food crisis,” the IMF said in a statement on Friday. The funds will also help support the East African nation’s economic adjustment and structural reforms, the fund added. He noted that Malawi is also implementing the debt restructuring needed to restore debt sustainability.

The new facility will operate for a year, IMF chief Kristalina Georgieva said earlier, and it is part of two emergency aid programs created to help countries cope with the effects of the pandemic. The programs are the Rapid Credit Facility, which provides interest-free loans for up to 10 years for poorer countries, and the Rapid Finance Instrument for richer economies and must be repaid in up to five years. In September, Georgieva met with Malawi President Lazarus McCarthy Chakwera and pledged to support the country as it faced economic challenges and unsustainable public debt. Malawi’s government has been in talks with the Washington-based crisis lender for months over its request for the aid package.

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