Lilongwe May 4, 2020;International Monetary Fund (IMF) Executive Board has approved disbursement of US$91 million to Malawi, as a way of helping the country meet the urgent Balance of Payment (BOP) needs arising from the COVID-19 pandemic.
In a statement released by the IMF on Friday, the disbursement falls under the Rapid Credit Facility and has been necessitated by the urgent BOP needs which have been created by the deteriorating macroeconomic outlook and the policy responses to mitigate the impact of the pandemic.
The Statement further said that the approval of the credit followed IMF's discussion of Malawi with regards its policy response to the pandemic, which among others focus on macro-economic stability while protecting the vulnerable.
"The IMF financing will help authorities meet large external financing gap and catalyze other concessional financing from the international community. The additional support will be critical to close the remaining gap," reads part of the statement issued by the IMF.
It added that the financing would help to facilitate the needed interventions to ease the economic and social impacts of the pandemic, while preserving country's hard-earned macro-economic stability.
The Statement commends government's commitment to the audit of COVID-19 related spending, saying it would help in safeguarding medium-term debt sustainability by enhancing public financial management.
"A widening of the budget deficit is appropriate in the near-term, given the fiscal costs associated with the economic slowdown and additional healthcare and social spending needs, which should be executed transparently and targeted to the most affected parts," the statement reads.
Commenting on the news, Treasury Spokesperson Williams Banda hailed IMF for the intervention, saying the financing would help the country meet its BOP obligations in the wake of the pandemic.
"Government was grateful to the IMF for the timely intervention. This financing will help Government meet its balance of payment obligations stemming from both microeconomic and macroeconomic impacts of Covid-19 on the economy," he said.
Banda said the development follows IMF's assessment of the shocks currently affecting the country's economy in the intermediate and long term.
He said Government made submissions highlighting what the economy was likely to be and what could be to maintaining the macroeconomic stability.
Banda said that the country's debt management strategy would help the country to sustainably manage the debt and trade-offs.
Malawi has registered a total of 39 COVID-19 cases as of May 3, 2020.
The Government has put in place various measures to contain and manage the pandemic, including managing the economic impacts of the same.