A Monumental event in the history of Malawi as Malawi finally qualifies for debt relief
The International Monetary Fund (IMF) and the World Bank on Friday announced a $2,9-billion debt-cancellation deal for Malawi, one of the world's poorest countries where 60% of the population lives on less than $1 per day.
The boards of the IMF and the World Bank -- two major sponsors of Malawi's economic reforms -- said this week that the country qualified for relief by completing the Highly Indebted Poor Countries initiative.
"This is a historic moment and very exciting news," Finance Minister Goodall Gondwe said. "It's a major milestone and a stepping stone to getting Malawi out of poverty."
Gondwe, himself a former IMF director, said Malawi will save about $110-million every year as a result of the debt relief, which wiped out more than 90% of Malawi's debt.
"It's one of the biggest things that can happen to a country," and should help boost Malawi's economic growth of 2% annually to a target of 6%, the minister said.
Malawi has won praise from international donors since President Bingu wa Mutharika took office in 2004. The former economist has tried to modernise the economy and clamped down on rampant corruption.
But the reforms have had a heavy political prize. Mutharika's party narrowly survived an impeachment attempt by former allies, who accused the president of abusing his office. His former vice-president stands accused of treason in allegedly plotting to kill him, and there is a seemingly endless stream of political crises and high-profile court cases.
The IMF's country director, Thomas Baunsgaard, warned that Malawi needs to "look carefully at borrowing to avoid accumulating debt and avoid getting into a similar debt situation".
"Debt relief alone is not enough ... Malawi needs to tackle corruption and strengthen public financial management systems," he said. "The cornerstone is to continue fighting corruption. The government should be vigilant in that area."
At least 60% of Malawi's population of 12-million live in poverty, on less than $1 a day. A high rate of HIV/Aids infection has compounded the country's problems. -- Sapa-AP