By Frank Phiri
LILONGWE (Reuters) – International Monetary Fund approval of up to $54 million of emergency funding for Malawi is likely in the next couple of days, sources said on Tuesday, as the southern African country struggles with acute forex shortages.
Malawi, which is experiencing chaotic queues at fuel stations that are running dry due to a lack of foreign currency, would be the first African country to receive special IMF emergency financing to deal with the global inflation crisis.
Ukraine received $1.3 billion under the same new programme, known as the “Food Shock Window”, earlier this month.
The IMF’s executive board is expected to sign off imminently on the funding of 50% of Malawi’s “quota”, or shareholding at the fund, after talks finished on Monday, fund and Malawi finance ministry sources told Reuters. They spoke on condition of anonymity as the decision was not yet final.
The IMF said last week it had discussed Malawi’s request for support under the emergency programme and that the board would consider it “as soon as possible”. The Food Shock Window was launched at the end of last month to help countries with balance of payments problems.
Malawi desperately needs funds to import fuel and subsidised fertiliser, the finance ministry source said, as pressure on the government grows ahead of the rainy season when farmers will need the fertiliser.
The donor-dependent country devalued its kwacha currency by 25% against the dollar in May. Inflation rose to 25.5% in August, according to the most recent official data.
Half of Malawi’s IMF quota is equivalent to about $54.4 million at current exchange rates on the fund’s website, and would be the maximum it can request for this emergency financing.
Finance Minister Sosten Gwengwe, who is still in Washington after last week’s IMF-World Bank annual meetings, declined to comment when contacted by Reuters.
(Reporting by Frank Phiri; Writing by Rachel Savage; Editing by Peter Graff)