Malawi’s debt bill this year will be $2-billion more than what it holds in foreign reserves, according to the International Monetary Fund (IMF) — an amount that’s equivalent to almost a fifth of the nation’s total economy.

The Washington-based lender expects the southern African nation’s gross reserves to slide to $118-million this year. Subtracting outstanding foreign-currency debt arrears, payments and what the fund labelled foreign currency drains leaves the balance deep in the red, projections published by the IMF on Tuesday showed.

“Malawi is at a critical juncture facing high inflation, an unsustainable fiscal and debt outlook, foreign-exchange shortages, and fuel scarcity” the fund said in a statement late Tuesday. It “emphasised the need for decisive and urgent policy action.”

The IMF didn’t give a breakdown of the total arrears, including whether part of this was owed to African Export-Import Bank. The Cairo-based lender said in May that Malawi was “up to date” on its payments, alongside Ghana and Zambia, which are also concluding debt restructurings.

While countries including Argentina have had net reserves that are billions of dollars in the red, the size of Malawi’s shortfall is notable when compared to its $11-billion economy.

The negative $2-billion includes both debt-payment arrears and loans that the government is “servicing via other means,” the IMF said, without providing further details.

Malawi is in the process of restructuring its external debt, which the IMF expects to reach 31.6% of gross domestic product this year. Part of that total includes almost $500-million owed to Afreximbank and another near-$400-million with the Trade and Development Bank.

The government said earlier this month it’s close to wrapping up a comprehensive debt-restructuring deal with bilateral and commercial creditors.