The International Monetary Fund (IMF) has offered an additional loan of $76.8m to Malawi, which is currently facing drought-propelled hunger.
“Malawi’s macroeconomic situation remains difficult, reflecting weather-related shocks and past policy slippages, which contributed to persistently high inflation,” said IMF Deputy Managing Director Min Zhu in a statement.
The global lender said it had decided to release the additional funds to Malawi as the government had demonstrated commitment to implement structural reforms and reign in spending.
“Accelerating the implementation of public financial management reforms is indispensable to building trust and confidence in the budget process and ensuring control over fiscal operations,” Zhu said in the statement issued on Monday.
The IMF has urged Malawi to ensure strong commitment controls, routine bank reconciliations, and regular fiscal reporting in order to preventing financial leakages as was the case in 2013 when over $32m was stolen from the Treasury in a scam called Cashgate.
“The pursuit of prudent fiscal policy is critical to safeguarding medium-term fiscal and debt sustainability. Improved revenue mobilisation and expenditure efficiency will reduce aid dependency and create fiscal space for social spending in pursuit of Malawi’s sustainable development goals,” Zhu observed.
IMF’s package is good news for Malawi as the country estimates that almost half of its population of 16 million will require food relief towards the end of the year and early next year.
Malawi, like its neighbours Mozambique and Zimbabwe, has issued red alerts of the hunger crisis following El Nino-induced drought that destroyed crops.