(Reuters) – The International Monetary Fund on Monday approved a $156.2 million loan to Malawi’s new government to address the country’s chronic balance of payments problems and to boost economic growth.
The fund said it would immediately disburse $19.5 million to the country, which elected a new president, Joyce Banda, in April. The economy had been teetering on the brink of collapse after former President Bingu wa Mutharika told donors he could run the aid-dependent country without their help.
Mutharika died in April of a heart attack.
The IMF said Banda’s government had moved quickly to devalue the kwacha currency, although the year-on-year inflation headline rate rose 17.3 percent in May 2012.
Her government scraped the kwacha’s peg to the dollar, triggering a devaluation by more than one third. The country is a major tobacco producer.
Sales of tobacco through official channels have increased and the private sector’s access to foreign exchange, including for fuel imports, has eased considerably, the IMF said.
A key target in the IMF-backed program is to increase annual growth from 4.3 percent to at least 6.5 percent as of 2015, and to boost usable international reserves to three months of imports from the current one month.