Malawi first recipient of IMF's 'emergency fund'

Photos

Ashes

see larger image

uploaded by john.duffell

• 

  uploaded by john.duffell | add comment

• 

  uploaded by john.duffell | add comment

• 

  uploaded by jrozwado | add comment

Being one of the poorest countries in the world, Malawi has not had a lot of luck lately. the nation in southern Africa was hit hard by high fuel and fertiliser costs, and with persisting droughts and failed crops millions of people are chronically undernourished. 

Due to this grim scenario, the International Monetary Fund (IMF) has granted Malawi - as one of the first countries in the world - access its Exogenous Shock Facility (ESF). This emergency fund is designed to ameliorate adverse economic conditions beyond a country's control.

Over the past years, Malawi has struggled with serious droughts. Despite this, the government says that the introduction of a subsidised fertiliser programme in 2005 resulted in a maize crop about 73 percent higher in 2007 than the average for the past five years.

A study by the University of Michigan however, claimed that there was a possibility of inaccurate crop estimates. The study said that this had encouraged higher maize exports, which had exacerbated food insecurity in Malawi and neighbouring Zambia.

Apart from hunger, Malawi also struggles with HIV/AIDS.

About a year ago, the IMF approved a one-year US$77.1 million loan to Malawi, of which US$51.4 million was available immediately. But the rising oil and food prices, have hampered the hoped for effect of the loan.

Although world oil prices have dropped, "the negative effects of the earlier price hikes will persist over the next few months, because current imports of oil and fertilisers were contracted at earlier high prices," Takatoshi Kato, the IMF's deputy managing director, said in a statement.