The International Monetary Fund (IMF) has extended an emergency loan of $101.96 million for Malawi to plug its fiscal deficit, a second installment of credit offered to tide over the financial hit from the coronavirus.
The first loan of $91 million was disbursed in May to fund a widening gap in balance of payment in the south-east African nation.
“Malawi’s economic outlook has worsened (since May)… with the accelerated spread of the pandemic in the country,” the IMF said in a statement.
It said the second credit facility will help strengthen the health care system, step up social spending, ensure food security, and ease liquidity constraints.
Malawi, one of the smallest land-locked countries in sub Saharan Africa, has been hit hard by floods, prolonged dry spells, crop-destroying pests and the coronavirus pandemic, leaving 15% of the population in need of food aid.
The Malawi Vulnerability Assessment Committee, a grouping of government, food experts and aid agencies, found that more than 2.6 million people in the country of 18 million would not be able to meet their food requirements during the 2020/21 consumption season.
The country also witnessed political instability in June when President Lazarus Chakwera unseated former President Peter Mutharika.
Though small in size – one-tenth the size of South Africa – Malawi is among the top ten in the continent in terms of population density and has been battered by the coronavirus with 5,773 total cases and 179 deaths.
The pandemic has forced the government to channel budget resources toward health care and seek external help, swelling its public debt to 59% of GDP, Chakwera said recently.
The country will need further assistance from the international community to close the remaining external financing gaps during 2020 and 2021, the IMF said.