Malawi set to seal $54m emergency funding from IMF in case of economic shock

LILONGWE, Oct 18 (Reuters) – The International Monetary Fund’s approval of up to $54 million in emergency funding for Malawi is likely in the coming days, sources said on Tuesday, as the country d Southern Africa is struggling with a severe shortage of foreign exchange.

Malawi, which is experiencing chaotic queues at petrol stations that are running out due to a lack of foreign exchange, would be the first African country to receive special emergency funding from the IMF to deal with the global inflation crisis.

Ukraine received $1.3 billion under the same new program, known as the “Food Shock Window”, earlier this month.

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The IMF board is expected to approve funding for 50% of Malawi’s “quota”, or participation in the fund, shortly after talks end on Monday, sources at the fund and Malawi’s finance ministry 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 program and that the board would consider it “as soon as possible”. The Food Shock Window was launched late last month to help countries with balance of payments problems.

Malawi desperately needs funds to import subsidized fuel and fertiliser, the finance ministry source said, as pressure on the government increases ahead of the rainy season when farmers will need fertiliser.

The donor-dependent country devalued its kwacha currency by 25% against the dollar in May. Inflation reached 25.5% in August, according to the latest 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 following the IMF and World Bank annual meetings last week, declined to comment when contacted by Reuters.

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Reporting by Frank Phiri Writing by Rachel Savage Editing by Peter Graff

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