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Malawi needs nearly US$1 billion in debt relief from its creditors by 2027, according to the International Monetary Fund’s announcement on Wednesday.
Vice President, Kashim Shettima, flanked on the right by the Minister of Art, Culture and Creative Economy, Barrister Hannatu Musawa, exchanging pleasantries with Nollywood veteran, Zack Orji.
The country is faced with severe shortages of essential items such as medicine, fuel, and fertilizers, primarily attributed to chronic foreign currency shortages.
The IMF report specifies that Malawi requires US$887 million in debt relief from its commercial creditors and an additional $99 million from its bilateral creditors for the period spanning from 2023 to 2027.
Last week, the IMF Executive Board granted approval for a four-year loan of US$178 million to Malawi. Securing a commitment from bilateral creditors, particularly China and India, to restructure their share of the external debt, which stood at US$4 billion at the close of 2022, was a crucial prerequisite for the IMF board’s endorsement of the loan, Reuters reported.
Malawi has struggled to sustain growth for decades despite large inflows of official development assistance. The past three years have been particularly difficult with stagnating growth and widening macroeconomic imbalances due to unsustainable debt and the effects of multiple shocks, including an outbreak of cholera and cyclone Freddy this year alone.
Malawi’s external debt is unsustainable, and debt service needs are eroding limited fiscal space. In response to economic challenges, Malawi, classified as one of the world’s poorest nations, implemented significant measures.
-Business Insider Africa
Online Reporter