The International Monetary Fund (IMF) has approved debt relief for Malawi to help address the economic impact of the Covid-19 pandemic.
Malawi is one of the 28 countries in the world to benefit from the third tranche of grants for debt relief under the catastrophic Containment and Relief Trust.
According to IMF, this new approval made on April 1 follows two previous tranches approved on 13 April 2020 and 2 October 2020 respectively.
Economists have hailed the move by IMF, saying the pandemic has exacerbated preexisting economic challenges.
This development comes when Malawi government plans to establish a Debt retirement Fund effective July 1 - to raise funds from the economy to service debts.
This will mean more taxes for the people to channel money to the fund.
Malawi's public debt stands at a whooping K4.8 trillion, which is nominal term is double the size of the revised K2.3 trillion 2020/21 National Budget.
Out of K4.8 trillion, eternal or foreign debt stands at K2.04 trillion or 23 percent of the gross domestic product (GDP) with the balance of K2.76 trillion or 31 percent of GDP being domestic debt.
IMF said on Monday that the tranche of debt service relief grants would continue to help free up limited financial resources for vital emergency health, social and economic support to mitigate the impact of the Covid-19 pandemic.
The approval allows for the disbursement of debt relief grants for the payment of all eligible debt services owed to the fund by its poorest and most vulnerable members from April 13 2021 to October 15 2021, estimated at $238 million dollars.
Other beneficiaries are Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, DR Congo, Djibouti, Ethiopia, Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Mozambique, Nepal, Niger, Rwanda, Sao Tome and Principe, Sierra Leone, Tanzania and Togo.
They are joined by Afghanistan, Haiti, Nepal, Solomon Islands, Tajikistan and Yemen.