ICBC London provides $66 million loan — via cross currency swap facility agreement — to Reserve Bank of Malawi to shore up foreign exchange reserves and finance the government’s current account deficit in 2021 (Linked to Record ID#98519 and ID#98521)

Project narrative

In 2021, the Reserve Bank of Malawi (RBM) — Malawi’s central bank — signed a cross currency swap facility agreement with the London Branch of the Industrial and Commercial Bank of China (ICBC London). The borrowing terms of the loan are unknown. However, the IMF has characterized RBM’s swap debt as ‘short-term’ and ‘very expensive’. The 2022 borrowing was collateralized against a $32 million cash deposit in a bank account accessible to ICBC London. The purpose of the loan was to shore up the country’s foreign exchange reserves and finance the Government of Malawi’s current account deficit. The loan’s (principal) amount outstanding was $66 million as of December 2021. In November 2022, the IMF assessed ‘Malawi’s overall public debt […] to be in distress' and urged the Government of Malawi to scale down its ‘excessive use of short-term [swap] instruments by the RBM.’ RBM’s short-term borrowings from ICBC London in 2020 and 2022 are captured via Record ID#98519 and Record ID#98521.