China explains skipping of Malawi on debt relief

Post was last updated: December 18, 2015

The Chinese Embassy says Malawi was left out on the list of countries to benefit from Chinese debt relief because the country is currently not repaying any loans to the country as it was still enjoying a 10-year grace period before it starts settling its debts with China.

Commercial and Economic Counselor at the Chinese Embassy in Malawi, Hudson Wang, said Malawi only signed its first interest-free loan agreement with China in 2011, which means it has up to 2021 to start serving the loans.

“It means that no interest-free loan has so far entered the period of repayment. As a result, Malawi doesn’t need to repay now and doesn’t fall into the category of debt-relief countries this time around,” said Wang.

He said if by 2021, Malawi remains a low income country, the Chinese government will likely consider debt relief for the country.

Hudson was , however, optimistic that Malawi would have grown economically to become a middle income country and be able to service its loan obligations without debt relief.

He further said as a new development partner of Malawi, China is endeavoring to make increasing contribution to the economic development of the country.

The debt relief was announced by Chinese President Xi Jinping during the China-Africa summit in Johannesburg a few weeks ago.

Some of the loans Malawi benefitted from China include US$80 million for the Malawi University of Science and Technology, US$110 million for Bingu International Conference Centre and the US$60 million Bingu National Stadium.

During the Summit, China committed to the establishment of US$2 billion South-South Cooperation Fund to be accessed by African countries for the Sustainable Development Goals.

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