IMF: Malawi 1st Country to Receive Funding under "Food Shock Program"

IMF: Malawi 1st Country to Receive Funding under "Food Shock Program"

The International Monetary Fund (IMF) announced that Malawi has become the first low-income country to receive financing from the Fund under a new tool aimed at helping countries adapt to shocks from rising global food prices, Bloomberg reported Tuesday.

The IMF said today: "Malawi is facing a challenge in terms of its economic and humanitarian conditions with a shortage of foreign exchange and an imbalance in the exchange rate, which led to a sharp decline in imports, including fuel, fertilizers, medicine and food.

Annual food inflation has more than doubled to 34.5% since Russia invaded Ukraine in February.

According to a statement, the Washington-based fund agreed to lend Malawi about $88.3 million "to meet urgent balance of payments needs and mitigate the impact of the food shock."

It is noteworthy that Malawi is among the 48 countries identified by the IMF as the most affected by the most severe food crises that the world has suffered from since the global financial crisis. It is estimated that around a fifth of Malawi's population faces severe food insecurity in the dry season from October to March, compared to just 15% a year earlier, according to the IPC report.

The IMF created a window to cope with food price shocks, last September, to support countries that face urgent needs for balance of payments financing, suffer from food insecurity, or from a severe shock in the export of grains, and the new financing window will remain open for one year.