The International Monetary Fund (IMF) has approved a new three-year $112.3 million loan arrangement for Malawi to assist the southern African country’s economic and financial reforms.

In a statement late on Monday, the IMF said the approval would enable the immediate disbursement of about $16 million, with the remaining amount to be phased over the duration of the programme, subject to semi-annual reviews.

“Malawi has shown progress in achieving macroeconomic stabilisation following two years of drought, with a rebound in growth and inflation reduced to single digits,” IMF Deputy Managing Director Tao Zhang said in a statement.

“However, the fiscal position has deteriorated and the public debt to GDP ratio has risen. Increased debt service pressures have reduced space for needed infrastructure and social spending.”

Zhang added that Malawian authorities were making efforts to entrench macroeconomic stability, raise growth and reduce poverty and that the “IMF arrangement under the extended credit facility will support the authorities’ programme and efforts”.

Malawi Finance Minister Goodall Gondwe said in February the government would aim to cut borrowing and stick to an IMF programme in order to boost the economic growth rate to 7 percent in the medium term.

Malawi’s economy is estimated to have expanded 4 percent last year from growth of 2.3 percent in 2016.

Malawi has a total public debt of $3.50 billion, with about a third of that in external debt.