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Malawi, China Sign Partial Debt Cancellation Agreement

Malawi, China Sign Partial Debt Cancellation Agreement

Malawi and China have today Tuesday in Lilongwe signed a partial debt cancellation agreement, with a 5 US dollar debt scraped off from the Asia’s economic giant’s debt list.

Minister of Finance Sosten Gwengwe has told us the development will help alleviate Malawi’s debt burden, and that it is a step towards accessing the Extended Credit Facility with the International Monetary Fund-IMF, whose condition for accessing it is to lobby for debt restructuring.

Gwengwe says last year, the Malawi Government pleaded for the cancellation of some of its debts which were settled for non-interest loans, adding this will play a remarkable role in the country’s development agenda.

“This partial debt cancellation will go a long way in alleviating our fiscal pressures to service debt amounting to RMB 46 million,” said Gwengwe.

Gwengwe added, “This gesture by the Chinese Government, small as it may look but given our present fiscal situation, it will give us some relief and these resources freed from debt service will be used for other development activities like buying drugs for our hospitals and buying textbooks for our children in primary school.”

He said negotiations for this partial debt cancellation started in early 2022 and we are very glad that it has been finally concluded, and said now they look forward to its implantation, as it means implementation is now effective.

In his remarks, the Chinese Ambassador to Malawi Long Zhou said China’s focus is to improve infrastructure development and investment, as well as stabilize Malawi’s economy.

Zhou said that the waiver of Malawi’s debts can effectively reduce its debt burden and improve investment environment for example, to achieve a steady economic recovery.

Zhou adds the waiver will not be accompanied by any conditions, but instead promote construction of a community with a shared future and common development, and hopes Malawi will take advantage of it to advance its economy.

“I sincerely hope that Malawi can take this opportunity to improve its debt structure, revitalize its economic development engine, and achieve the various development goals of the Malawi 2063 Vision at an early date,” Zhou said.

He added that “Under the framework of the Forum for China-Africa Cooperation, China will continue to strengthen pragmatic economic and trade cooperation with Malawi, solidly promote the implementation of nine major projects between China and Malawi, maintain close communication with Malawi on debt issues, and make unremitting efforts to promote the economic and social development of Malawi.”

Reports indicate that three-quarters of Africa’s economic share is with lenders.

China has previously financed some major infrastructural projects including Bingu National Stadium and the 5 million dollar worth Karonga-Chitipa road.

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Last modified on Tuesday, 28/02/2023

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