Malawi is heading back to its old ways of accumulating massive foreign debt barely 5 years after the international community approved a debt relief program for the Southern African country.
Through Malawi’s securing of a $200 million (K34 billion), largely from various creditors, to steady the deteriorating economy the country has dramatically pushed up its foreign debt beyond the $1
RBM governor Dr Perks Ligoya said in November last year that the country needed a $200 million injection between then and December to stabilise it from import cover shocks to acquire fuel and vital
In an interview this week, RBM spokesperson Ralph Tseka said the funds have been secured using a combination of facilities.
“The money has been found through different arrangements like currency and foreign exchange swaps. There have also been some injections from donors, notably DfID (Department for International Development), Norway and Irish governments,” said Tseka.
Analysts have advised both the government and IMF to strike a compromise on the macro-economic challenges affecting Malawi as the ongoing stand-off to unlock the country’s budgetary support from donors will only lead to total economic collapse.
IMF has put its foot down on Malawi to devalue its currency, the kwacha but government has argued that it can’t devalue now since it will only lead to skyrocketing prices of commodities and services on the market.
President Bingu wa Mutharika stand is that the international community must sort out Malawi’s foreign exchange supplies to avoid empowering the blackmarket through devaluation.
When contacted Minister of Finance Ken Lipenga said government is still making progress with IMF.
“Despite all concerns from both parties we are still in contact with the IMF and we know that these challenges will be resolved this year,” said Lipenga.