Economic experts have said the Treasury faces a daunting task to prudently use the $88.3 million Rapid Credit Facility (RCF) programme once approved by the International Monetary Fund (IMF) board to lure more support from other development partners.
The experts further say the money is not enough to make a significant impact on the economy.
This comes against a background of a yawing balance of payment deficit and unsustainable foreign debt levels the country has been facing.
Last week the IMF announced that Malawi has become the first low-income country to reach a staff-level agreement to receive emergency financing through its new Food Shock Window under the Rapid Credit Facility.
“This emergency financing under the new Food Shock Window will help Malawi address urgent balance of payments needs related to the global food crisis. Program Monitoring with Board involvement will support the government’s economic reforms to restore macroeconomic stability and provide the foundation for an inclusive recovery,” an IMF report reads.
In an interview, Malawi University of Business and Applied Sciences-based economist Betchani Tchereni said the situation shows how disparate, poor and lacking Malawi is when celebrating such a loan.
He said if the money will be used for acquiring strategic commodities such as medicines and fuel, it may last at least two months but if it is used for other services and commodities it will only last a week.
In a separate interview, Blantyre-based economist Murry Siyasiya said the fund’s support remains a short term solution.
“There will not be a significant bearing on Malawi’s economy. The problem is that the authorities have somewhat a prescribed way of doing things which has not helped Malawi and are not able to do it the other way but what we need to do is to boost exports, that is the only way we can accumulate foreign exchange as a sovereign state, of course we should expect to see more donor support but it remains a temporary measure,” Siyasiya said.
A Monthly Economic Review for August 2022 shows that foreign exchange reserves increased to $777.3 million representing 3.1 months of imports at the end of the month from $768.9 million recorded in the preceding month.
The $88.3 million would bring the foreign exchange reserves to $865.6 million still in the region of three months import cover.