Chinese Government cancels RMB 46 million of the Government of Malawi’s outstanding repayment obligations in 2023

In early 2022, the Government of Malawi and the Chinese Government initiated negotiations over a potential debt cancellation agreement.

Then, on February 27, 2023, the Chinese Government and the Government of Malawi signed a partial debt cancellation agreement, which cancelled 46 million of the Government of Malawi’s outstanding debt obligations. These debts resulted from one or more interest-free, MOFCOM loans that the Government of Malawi previously contracted.

At the debt cancellation agreement signing ceremony, Malawi’s Minister of Finance Sosten Gwengwe said that ‘[t]his gesture by the Chinese Government, small as it may look but given our present fiscal situation, […] 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.’ Gwenge also said that it was a step towards accessing an Extended Credit Facility (ECF) with the International Monetary Fund (IMF).