IMF ups loans to Malawi as fuel costs squeeze

WASHINGTON (Reuters) - The International Monetary Fund increased funding to Malawi by $16.9 million on Monday, approving a total disbursement of $24.7 million to help the country cope with soaring fuel and fertilizer prices.

The disbursement to the southern African country is the final payment by the IMF under a three-year $62.1 million loan program agreed in 2005.

IMF Deputy Managing Director Takatoshi Kato said the increased funding was approved because of concerns over Malawi's low levels of international currency reserves and the threat that posed to financial stability and food security.

"Rising fuel and fertilizer prices are increasing the downside risk and adding inflation pressure," Kato said in a statement. "Further consolidation of government net domestic debt will facilitate the further accumulation of international reserves without jeopardizing growth and crowding out the private sector," he added.

The IMF said financial help from donors would help smooth the adjustment.