Adedapo Adesanya
By Adedapo Adesanya
The International Monetary Fund (IMF) has approved a $91 million loan for Malawi to help fund a balance of payments deficit.
The global lender said in a statement that the new loan will help ease the impact of the COVID-19 pandemic on the African country.
According to Mr Tao Zhang, deputy manager of the IMF, “The COVID-19 pandemic is having a severe impact on Malawi, creating an urgent balance of payments need.
“The authorities have been proactive in mitigating the impact of the pandemic, including through increased spending on health care and social assistance and ensuring food security through purchase and storage of agricultural harvests.”
The low-income southeast African country, which so far has reported less than 40 coronavirus cases and three deaths, was already suffering from economic stagnation linked to drought, leading to increasing unrest over falling living standards which has now worsened under current circumstances.
Malawi’s main export is tobacco, which makes up about 50 percent of export earnings, alongside other crops such as tea and sugar, which travel restrictions brought about by lockdown have further compounded ability to export the commodities abroad.
The World Bank in April had approved a $37 million funding package to help Malawi respond to the coronavirus pandemic in the country.
The funding will help support the Government of Malawi’s economic policy response by reducing adverse revenue shortfalls, in addition to address critical care needs for COVID-19 response by strengthening national systems for public health response and addressing the burden that COVID-19 will place on the fragile health system which risks undermining continuity in routine care.
The Bretton Wood institution did this as part of a $160 billion financial support that it will provide over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.
