Malawi is urgently seeking almost $1 billion in debt relief from its creditors by 2027, according to a report by the International Monetary Fund (IMF). The southern African nation is grappling with severe shortages of medicine, fuel, and fertilizers due to chronic foreign currency shortages.
Rachel Savage, Africa Senior Markets Correspondent at Reuters, reported that the IMF disclosed that Malawi requires $887 million in debt relief from its commercial creditors and an additional $99 million from its bilateral creditors between 2023 and 2027. Last week, the IMF Executive Board approved a four-year loan of $178 million to support Malawi.
Ms. Savage stated that the approval was contingent on securing a commitment from bilateral creditors, including China and India, to restructure their share of the external debt, which stood at $4 billion at the end of 2022.
She noted that Malawi, one of the world’s poorest countries, recently devalued its currency by around 30% and raised fuel and electricity prices to address economic challenges. The government also revised its growth forecast for the year to 2.7%, down from the initial projection of 1.5%.
Ms. Savage said that the country’s main commercial creditors include the African Export-Import Bank (Afreximbank) with $495 million owed and Trade & Development Bank with $395 million at the end of 2022.
She disclosed that among bilateral creditors, China and India hold a significant share, with $222 million owed to the Export-Import Bank of China and $114 million to Exim India.
While Malawi is currently meeting its obligations to bilateral creditors, she said that it is in arrears to its commercial creditors, according to IMF mission chief Mika Saito.
Ms. Savage further noted that the country faces a financing gap of $1.6 billion for the period 2023-2027, with the majority expected to be covered through debt restructuring, supplemented by grants, concessional loans, and the IMF loan, as outlined in the IMF report.