Minister of Finance Sosten Gwengwe stated that the cancellation of the debt will also enable the country to access the Extended Credit Facility (ECF) with the International Monetary Fund (IMF).
Gwengwe further elaborated that the cancellation of some of Malawi’s debts settled for non-interest loans will play a crucial 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.
He expressed gratitude towards the Chinese government, saying that this gesture, although small, will give the country some relief from its current fiscal situation.
“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,” added Gwengwe.
In an interview, the Chinese Ambassador to Malawi, Long Zhou, emphasized China’s focus on improving infrastructure development and investment, as well as stabilizing Malawi’s economy.
Zhou expressed hope that Malawi will take advantage of 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.
“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, and solidly promoting the implementation of nine major projects between China and Malawi.
The waiver of the Malawi’s debts will not be accompanied by any conditions, but will promote construction of a community with a shared future and common development.
China has previously financed major infrastructure projects in Malawi, including the Bingu National Stadium and the Karonga-Chitipa road worth 5 million dollars.
Negotiations for this partial debt cancellation started in early 2022, and Malawi is pleased that it has finally been concluded.