Malawi needs almost $1 billion in debt relief from its creditors by 2027, the International Monetary Fund said on Wednesday, as it battles severe medicine, fuel and fertiliser shortages due to chronic foreign currency shortages.
The landlocked southern African country needs $887 million in debt relief from 2023 to 2027 from its commercial creditors and $99 million from its bilateral creditors, the IMF said in a report.
The IMF Executive Board approved a $178 million, four-year loan to Malawi last week. Getting a commitment from bilateral creditors China and India to restructuring their portion of its external debt, which was $4 billion at the end of 2022, was a key requirement for the IMF board to sign off on the loan.
Earlier this month Malawi, one of the world's poorest countries, devalued its currency by about 30% and hiked fuel and electricity prices, while on Monday the government cut its growth forecast for the year to 2.7% from 1.5%.
Malawi owed its main commercial creditors the African Export-Import Bank (Afreximbank) $495 million and Trade & Development Bank $395 million at the end of 2022.
Of its bilateral creditors, most was owed to China and India - $222 million to the Export-Import Bank of China and $114 to Exim India.
Malawi is still paying its bilateral creditors, but is in arrears to its commercial creditors, IMF mission chief Mika Saito said earlier in November.
Malawi has a 2023-2027 financing gap - the difference between its export revenues and the cost of imports and servicing external debt - of $1.6 billion, so most of that is slated to be filled by the debt restructuring, with the rest from grants, concessional loans and the IMF loan, the IMF report said. (Reporting by Rachel Savage; Editing by Alex Richardson)