Donor Confidence: China cancels RMB46Million (MK5Bn) debt for Malawi
President Dr Lazarus Chakwera Government continue its cordial relationship with bilateral partners. Since Chakwera took over reigns of power from previous regime Malawi has seen return of donor confidence.
Just today, 27 February, 2023, The People’s Republic of China signed a $5 million partial debt cancellation facility with the Malawi Government. This amount is almost MK5bn.
The signing agreement took place at the Ministry of Finance Headquarters at the Capital Hill in Lilongwe.
Last year China announced an aid package which included debt cancellation.
During the Forum on China-Africa Cooperation Conference, held virtually in August last year, Chinese Foreign Minister Wang Yi said the Chinese Government has waived 23 interest-free loans for 17 African countries.
Briefing reporters in Lilongwe on Monday, Chinese Ambassador to Malawi Long Zhou said the waiver of the relevant debts of Malawi can effectively help Malawi reduce its debt burden, improve its investment environment and seek more international support, so as to achieve a steady recovery of its economy.
On his part, Malawi’s Finance Minister Hon Sosten Alfred Gwengwe MP hailed the People’s Republic of China for the partial debt cancellation.
Gwengwe said: “The partial debt cancellation will go a long way in alleviating our fiscal pressures to service debt amounting to RMB 46 million. 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 text books for our children in primary schools,” he said.
Gwengwe said negotiations for this partial debt cancellation started in early 2022.
“We are very glad that it has been finally concluded. By signing this agreement, the debt cancellation process of RMB 46 million will become effective and we look forward to its implementation,” said Gwengwe.
He said in addition to this partial debt cancellation, the two governments are further engaged in negotiations for debt rescheduling to help restore debt sustainability to moderate risk.
“We remain hopeful that we can reach an amicable settlement and we look forward to your Excellency’s support in these negotiations,” he said.
He added: “Your support is helping in socio-economic development of
Malawi, and we are extremely appreciative for that. I would like to end by thanking the Ambassador for your support of this Protocol on the Partial Debt
Cancellation between our two governments.”