Category: Government Policy

The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of US$88.327 million (SDR 69.40 million) to Malawi under the new Food Shock Window of the Rapid Credit Facility. [1]

Concurrently, the Executive Board discussed a 12-month Staff-Monitored Program (SMP) for Malawi, which was approved by the Management of the IMF on November 11. With timely implementation of the program, the SMP would help the authorities establish a track record of policy implementation, possibly paving the way to an IMF-supported upper credit tranche (UCT) program.

The Executive Board, which recently amended the policy for SMPs to allow for Program Monitoring with limited Board involvement (PMB) [2] on October 4, 2022, assessed that Malawi’s policy program is sufficiently robust to meet the stated objectives under the SMP and that its implementation is expected to achieve the purpose of building a track record toward a UCT-quality Fund arrangement. The Board noted that the program would benefit from limited Board involvement given concerted international efforts by creditors and donors to provide substantial new financing and debt relief, and Malawi’s significant outstanding Fund credit under emergency financing instruments.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of US$88.327 million (SDR 69.40 million) under the Food Shock Window of the Rapid Credit Facility to help Malawi address urgent balance of payment needs related to the global food crisis. Food insecurity in Malawi has increased significantly owing to multiple tropical storms, below-average crop production, and increasing prices for food and agricultural inputs such as fertilizer and seed. As a result, about 20 percent of the population is projected to be acutely food insecure during the upcoming 2022/23 lean season (October 2022-March 2023), or more than twice as many people as in 2021.

The authorities also requested the Staff-Monitored Program and Program Monitoring with Board involvement to build a track record of policy implementation, possibly paving the way to an IMF-supported Upper Credit Tranche (UCT)-quality program. The Board and Management welcomed the steps the authorities have taken since the Article IV Consultation in December 2021 to stabilize the economy and build the foundation for inclusive growth.

Following the Executive Board’s discussion, Mr. Bo Li, Deputy Managing Director and acting Chair, issued the following statement:

Malawi is facing a challenging economic and humanitarian situation, with foreign exchange shortages and an exchange rate misalignment leading to a sharp decline in imports including fuel, fertilizer, medicine, and food. Emergency financial assistance under the RCF’s new food shock window would help address urgent balance-of-payments needs and mitigate the impact of the food shock.

The Management-approved staff monitored program (SMP) is sufficiently robust to meet the authorities’ stated objectives, and its implementation is expected to achieve the purpose of building a track record toward an Upper Credit Tranche (UCT) -quality program supported by a Fund arrangement.

Malawi’s track-record building SMP will benefit from limited Board involvement given the ongoing concerted international effort by creditors and donors to provide substantial new financing and debt relief to Malawi, as well as Malawi’s significant outstanding Fund credit under emergency financing instruments.

Fiscal discipline, supported by a realistic budget, an enhanced Public Financial Management system and timely production of comprehensive fiscal reports, is important. Restoring price stability and ensuring financial sector stability will help build a foundation for private sector-led growth.

Rebuilding external buffers will be critically important to reduce Malawi’s vulnerabilities to external shocks. The RBM’s commitment to rebuild its foreign exchange reserves, requiring implementation of its strategy to wind down unsustainable policies including excessive use of swaps and trade credit to maintain strategic imports and other quasi-fiscal operations, is welcome.

While debt is sustainable on a forward-looking basis, risks to the program are high. It will be critical to swiftly implement the authorities’ debt restructuring strategy, which aims to bring Malawi back to moderate risk of debt distress in the medium term. The credible process underway to restructure the authorities’ debt to commercial creditors, which in itself would restore debt sustainability albeit with high risk, is welcome. Swift progress is also needed on the reprofiling of official bilateral debt. A concerted effort among the authorities, their creditors and the international development partners will be crucial to ensure a successful implementation of the debt restructuring strategy.

Addressing weaknesses in governance and institutions and enhancing transparency will be important. In this regard, strong corrective actions to address the issues that led to misreporting under the 2018 ECF, including implementation of the recommendations of the 2021 safeguards assessment, and measures to strengthen foreign exchange reserve management are welcome. The authorities are urged to move to a UCT-quality program as soon as feasible.

[1] The Food Shock Window provides, for a period of a year, a new channel for emergency Fund financing to member countries that have urgent balance of payment needs due to acute food insecurity, a sharp increase in their food import bill, or a shock to their cereal exports.

[2] SMPs are informal agreements between national authorities and IMF staff to monitor the authorities’ economic program. As such, they do not entail endorsement by the IMF Executive Board. Under recent reforms to the policy on staff monitored programs, the Executive Board, in specified circumstances, has limited involvement, not amounting to endorsement of the policy program. In such cases, the Board’s role is limited to (i) opining on the robustness of the member’s policy program to meet the objectives stated in the Management approved SMP and to achieve the purpose of building or rebuilding a track record toward a UCT-quality program, and (2) in the context of reviews, to indicate if the member is on track to achieve these objectives.

Source: International Monetary Fund

Malawi is battling a protracted cholera outbreak that begun in March 2022 in districts affected by Tropical storm Anna and Cyclone Gombe in the Southern region of the Country. The current outbreak is unprecedented, spreading to districts in central and northern regions that have not experienced cholera in over a decade. From March up to Mid-August the country had 1000 cholera cases with 10 districts affected. The risk is very high at the national level with accumulated cases of over 3960 and 111 deaths in 22 affected districts as of October 6, 2022.

The World Health Organization (WHO) together with the Ministry of Health is calling on donors, partners, and all relevant stakeholders to strengthen the cholera outbreak response in Malawi. The country is targeting to contain the cholera outbreak before the rainy season starts which could be in the next in sixty days. The appeal for all stakeholders to contribute to the response was made at a media briefing that was hosted by by the Minister of Health Honorable Khumbize Kandodo Chiponda (MP) and the WHO Representative for Malawi Dr Neema Rusibamayila Kimambo on 4 October 2022 at the Ministry of Health Headquarters in Lilongwe.

The current upsurge in cases is reported in the dry season which is traditionally a low transmission period for Malawi. The rainy period occurs from November through March which could increase cholera transmission across the region.

“It is one of the worst cholera outbreaks to hit Malawi in over ten years and this calls for all stakeholders within and beyond the health, water and sanitation sectors to contribute to the cholera response. We are calling for support to contain the cholera outbreak before rains hit hence the 60 days target,” said Honorable Chiponda. The funding GAP for the Cholera response plan in 14 million USD.

Malawi is facing multiple public health emergencies namely, COVIDS 19, polio and cholera outbreaks and the government is overwhelmed hence the need for more coordinated response strategy. The Ministry of Health with support from WHO and partners have updated its The Cholera Epidemic Preparedness and Response Plan. The plan is intended to contribute to the implementation of an effective, comprehensive, integrated system of cholera prevention and control in Malawi.

“We are on the verge of having a public health crisis if we do not mobilize great support for Malawi. We urge donors, partners and all stakeholders to work together to support government’s goal to contain the cholera outbreak urgently,” said Dr Kimambo.

Cholera is an acute diarrheal disease caused by infection of the intestine with the bacterium Vibrio cholerae. The disease is characterized by a sudden onset of profuse painless watery diarrhea, occasional vomiting and in severe cases, rapid dehydration leading to death if prompt treatment is not given. Cholera is treated using fluids (oral or intravenous) with or without antibiotics such as doxycycline or azithromycin/erythromycin. Cholera is linked to poor hygiene, poor sanitation and lack of, or limited access to, safe drinking water. It can be prevented by improving access to safe water, sanitation and hygiene (WASH) and the selective use of oral cholera vaccine (OCV).

The UN through WHO and UNICEF have recently secured USD one million from the UN Central Emergency Response Fund (CERF) to support the response.

WHO Support to the Response

• WHO is assisting Malawi to acquire adequate oral cholera vaccine doses to protect at-risk populations in affected districts (prioritized by burden of Cholera disease in the districts).
• WHO supported the update of a risk assessment with greater focus on the epidemiological situation, the state of preparedness and response readiness, and identifying the critical needs in affected and at-risk districts.
• The WHO team is working with the Ministry of Health and partners to strengthen disease surveillance, provide medical treatment for patients, distribute laboratory supplies, monitor water quality, and chlorinate public water supplies, and promote health education and hygiene among affected and at-risk communities.
• In the ongoing cholera outbreak response, WHO donated to the Ministry of Health assorted cholera investigation, laboratory, and case management kits to facilitate sample collection from suspect cases, onsite rapid diagnostic testing, sample transportation to the laboratory and eventual testing as well as the clinical management of cholera cases at designated cholera treatment centers, units, and oral rehydration points.
• WHO trained over 800 health care workers in lifesaving critical care skills nationwide in readiness for such outbreaks.
• WHO is supporting case management though capacity building, supporting surge additional health workers and support for tents, equipment, medical supplies, lab reagents and medicines for cholera case management.
• WHO stockpiled cholera supplies in the Ministry of Health central medical stores following a risk assessment on the potential outbreak spread beyond southern Malawi.

Supplies Provided by WHO

• WHO procured cholera kits for case management worth $54,600 for different levels of care i.e. (including but not limited to; community, peripheral, central, and laboratory supplies) specialized clinical supplies and consumables. The kits also contained Infection Prevention and Control items such as gloves, gowns, handwashing items have been distributed in all districts reporting cases serving at risk-populations.
  • So far, 48,000 Ringers Lactate with giving sets of different sizes have been distributed to affected districts.
  • Antibiotics (Doxycycline) enough doses to treat 1,200 cholera cases have been distributed to facilities in affected districts.
  • 1,005 litres of fuel for distribution of cholera supplies, allowances for drivers and assistants was supplied to MOH.
  • Twelve tents to set up treatment centers were distributed and erected in selected affected districts.
  • WHO also:
    • supported procurement of Cholera tests which are adequate to test up to 1000 cases and these have been distributed to all facilities in affected districts.
    • Conducted sensitization meeting at Kabwangala, Chiri fishing villages reaching approximately 320 people in around 80 temporary and semi-permanent households.
  • A total of six traditional authorities and area development committees plus 43 fishing villages have been reached along lakeside and 120 local miners in hotspot areas in Nkhata Bay.

Source: World Health Organization