President Lazarus Chakwera has said he will take advantage of the 3rd China- Africa Economic and Trade Expo (Caete) to seek debt restructuring with Chinese authorities.
Chakwera was speaking at Kamuzu International Airport in Lilongwe Tuesday on his departure for the East Asian country which is one of Malawi’s biggest external creditors.
As at December 2021, Malawi owed China $239 million.
Chakwera’s plea for debt restructuring with the Asian giant will come barely a week after he also made a similar request to the Afreximbank in Accra Ghana during the bank’s 30th anniversary.
“We will take advantage of [the expo] in order for us not only to see what we can sell from Malawi in terms of trade and what economic activities the two nations can accomplish for our benefit.
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“We also want to talk about the debt levels that we have, agreements that we had in the past and how we can continue in the future vis-a-vis the [International Monetary Fund] programme,” the President said.
On February 27 this year, the People’s Republic of China signed a $5 million partial debt cancellation facility with the Malawi Government to concretise the debt relief package announced by China in August last year.
Malawi is running against time to have its K7.9 trillion unsustainable debt restructured ahead of its assessment with the IMF for a possible Extended Credit Facility (ECF) programme.
In the absence of the programme with the IMF, Malawi has witnessed an acute shortage of forex as partners are hesitant to support the country.
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Malawi owes Afreximbank about $757 million in foreign debt and Trade and Development Bank about $145 million.
During the Afrexim meeting, Chakwera said the ECF would help in restoring Malawi’s repayment capacity by rebuilding reserves and reducing the macroeconomic imbalances.
Reacting to the Malawi leader’s plea, Afreximbank president and board chairperson Benedict Oramah said the bank was in solidarity with Malawi’s pursuit of the debt restructuring mechanism to secure the ECF.
“We will do everything Customs Controlled Warehousing System, which he said will be key in tracking both the volume of the exports, as well as the value accrued from the proceeds of those exports, to the international market.
“To address the two, we have collaborated with the Ministry of Finance, Ministry of Trade and also the Ministry of Agriculture, Malawi Revenue Authority (MRA) and Reserve Bank of Malawi. (RBM)So if exporter A is exporting 20 kilogram to Tanzania, for argument’s sake, that information is already with MRA through Customs Controlled Warehousing, and the same information is with RBM because it is declared under CD1 forms. This, therefore, gives us a chance to ease monitoring and tracking of exports and also export proceeds,” he added.
Last month, Chinese Ambassador to Malawi Long Zhou acknowledged that over the past three years, the Chakwera government has made progress to increase the number of exports that go into the Chinese market, stressing that during the period under review, several deals have been negotiated and agreed.
Under the umbrella theme of “Common Development for a Shared Future,” the expo is expected to delve into key areas and emerging fields of China- Africa economic and trade cooperation, during which there will be 30 activities in five categories of major activities, high-end forums, matchmaking and negotiation, thematic seminars and other supporting activities.
A 2023 Malawi government Annual Economic Report shows that the trade deficit improved from $2.07 billion in 2021 to $564.41 million in 2022, representing a 68 percent improvement.
