The International Monetary Fund (IMF) suspends negotiations with the government of Malawi for a possible resumption of financing to the country. At issue is the high levels of debt that the country has, associated with a fragile economy, characterized by shortages of foreign currency, fuel, food.

It should be noted that Malawi is $3.44 trillion in external debt, which represents 56.8% of Gross Domestic Product.

The figures represent pressure on fiscal space and the IMF considers that the country is at a level of over-indebtedness and debt unsustainability, which prevents further talks.
The country's economic situation, according to the Fund's managing director, Kristalina Georgieva, makes it necessary to request debt relief from creditors, especially China, and the private sector.

This is the formula that could lead the IMF to resume financing so that Malawi can get back on its feet economically and become a viable market for investment.

The International Monetary Fund's position, does not solve the already complicated situation for Malawi, whose Balance of Payments is running a deficit.

By the way, the Malawian economy is going through a serious crisis, whose recovery is not in sight in the short term, and after the devaluation of the kwacha, local currency by 25 % against the main world currencies, it was expected that the IMF would be sensitive.

Three months after the devaluation, Malawi is facing a shortage of foreign exchange, which could have been reversed if the IMF had resumed financing.

Malawi's finance minister, Sosten Gwengwe, said that the country has never failed to pay its debts to international trade creditors, precisely because of the adverse effects on the economy.

He assured that the Malawian executive has optimized the budget and created instruments to address the financing gap, a strategy aimed at controlling the country's debt level. (RM)