IMF lends Malawi $80 million to boost reserves

The International Monetary Fund has loaned Malawi $80 million, which would be used to help build up its low foreign reserves, IMF and government officials said on Wednesday.

IMF Malawi representative Maitaland MacFarlan said the funds were part of the $250 billion allocation meant to ensure liquidity in the global economic system by assisting member countries.

There are both long term and short-term strategies involved in addressing forex shortages and building up reforms in support of improvement in quality and volume of export products available, he said.

Central bank general manager Wilson Banda told reporters the money would help to improve the countrys worrying foreign reserves position.

Reserve Bank of Malawi monetary policy committee minutes show foreign reserves had fallen to $109.9 million, less than a month of import cover, by mid-July from $133.3 million in June.

The deterioration was blamed on higher demand from importers and low earnings from tobacco exports the countrys main foreign exchange earner.

The global downturn has hit tobacco demand, leading to lower prices. The central bank has forecast Malawi will earn about $393 million from tobacco this year, 17 percent lower than last year.

MacFarlan said the Malawi government should put in place short term measures to help boost reserves, including raising import tariffs.

Nyasa Times

Post published in: Economy

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