Coronavirus: IMF approves US$91 million credit for Malawi to tackle COVID-19 effects

02 Mai 2020

Lilongwe, Malawi, May 2  (Infosplusgabon) - The International Monetary Fund (IMF) Saturday approved a disbursement of US$91 million under the Rapid Credit Facility to help Malawi meet urgent balance of payment needs stemming from the COVID-19 pandemic.

It noted that Malawi was being severely affected by the COVID-19 pandemic while spillovers from the sharp global slowdown as well as the economic disruption in the Southern Africa region were weighing on international trade, tourism, remittances, investment, and consumption.

“The pandemic is expected to have a significant impact on Malawi, including affecting the near-term economic outlook, which has deteriorated significantly,” the IMF said in a press statement.

Malawian authorities have proactively responded to the pandemic with a national response plan = supported by the World Health Organization and other development partners - and measures to preserve macroeconomic stability while protecting the vulnerable.

The national lockdown introduced to contain the pandemic has also impacted the near-term economic outlook, which has deteriorated significantly, with large uncertainties surrounding the duration and spread of the pandemic.

Key elements include increased health sector outlays, supporting incomes and food security of the most vulnerable households with expanded social assistance and grain purchase programmes, and easing liquidity constraints in the banking system.

Following the Executive Board’s discussion on Malawi, IMF Deputy Managing Director Tao  Zhang said that the Fund’s emergency financing under the Rapid Credit Facility would help the authorities meet the large external financing gap and catalyze further assistance from the international community.

“Additional concessional donor support will be critical to close the remaining external financing gap and facilitate the needed interventions to ease the economic and social impacts of the pandemic, while preserving Malawi’s hard-earned macroeconomic stability,” he remarked.

“A widening of the budget deficit is appropriate in the near-term, given the fiscal costs associated with the economic slowdown and critical additional health care and social spending needs, which should be executed transparently and targeted to the most affected parts of society.’

According to Zhang, the authorities’ commitment to the audit of COVID-19 related spending is welcome.

“Once the crisis abates, it will be important to safeguard medium-term debt sustainability by boosting domestic revenue mobilization and enhancing public financial management,” he added.

FIN/ INFOSPLUSGABON/UIO/GABON2020

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