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World Bank, IMF top lenders list

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Two Britton Woods’ institutions, the World Bank (WB) and the International Monetary Fund (IMF) remain top on list of Malawi’s bilateral lenders and source of external debt, a 2020/2021 Mid-Year public debt report has shown.

The report which covers the period between June and December 2020, shows that the IMF overtook the African Development Fund (ADF) to become the second biggest creditor followed by the People’s Republic of China and India.

It further indicates that as at end December 2020, $2.2 billion representing 83.87 percent of total external debt, came from multilateral creditors compared to $1.9 billion reported in June 2020.

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Bilateral creditors accounted for 16.13 percent of all external debt at $426.0 million from $406.82 million in June 2020.

“During the first six months of 2020/21 financial year, the increased external debt stock is mainly attributed to loan disbursements made to cushion the economy from the effects of the Covid pandemic,” reads the report.

Notably, the IMF disbursed $101.96 million under the Rapid Credit Facility.

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In addition, the ADF provided $24.48 million as direct budget support while IDA disbursed $120.28 million under various projects.

Likewise, the Exim Bank of China registered significant disbursement under the newly contracted loan, National Fibre Backbone Phase II.

The report also shows that: “at end December 2020, out of the domestic debt stock of K2.72 trillion, 83.31 percent were treasury notes, treasury bills went up from 10.82 percent in June 2020 to 11.95 percent in December 2020. The holdings of Ways and Means Advances from the RBM were 4.08 percent and Zero-Coupon Promissory Notes were at 0.66 percent.”

In an interview, the Polytechnic-based economic lecturer Betchani Tchereni said such trends are worrisome and that Malawi should negotiate with the international community on packages that will graduate her from such loans.

Recently the government indicated that it will resort to more conventional loans from the international community which is cheaper than borrowing domestically.

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