Lilongwe First Recipient of New IMF Buffer Finance

Malawi became the first low-income nation to receive financing from the International Monetary Fund under a new tool intended to help countries cope with global food price shocks. The African country will get $88.3 million to “address urgent balance-of-payments needs and mitigate the impact of the food shock,” according to a statement. Malawi is facing a challenging economic and humanitarian situation, with foreign exchange shortages and an exchange rate misalignment leading to a sharp decline in imports including fuel, fertilizer, medicine, and food. Emergency financial assistance under the RCF’s new food shock window would help address urgent balance-of-payments needs and mitigate the impact of the food shock. The Food Shock Window provides, for a period of a year, a new channel for emergency Fund financing to member countries that have urgent balance of payment needs due to acute food insecurity, a sharp increase in their food import bill, or a shock to their cereal export. Separately, the fund and South Sudan reached a staff-level deal to provide the nation with $112.7 million in emergency financing, which needs to be approved by IMF’s board.

SOURCE: BLOOMBERG | IMF